we are selling financial services that we receive a bulk commission for as administrators. I record it as sales receipts. Then we pay commission to brokers which I record using "cheques" in QB. Now, one broker was overpaid and needs to return the funds. If this was already in the bank account I would just deposit it to COGS to reduce the commission paid but how to record that the commission is due back to us? One QB user advised to create an invoice but this will create extra sales which is not true. Any other idea?
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Who you pay should be set up as a supplier
Then if you enter a bill for the supplier, paying more than what is due to the supplier will record a supplier credit that can be applied to the next bill.
I do not know UK accounting regulations, but in the states, your situation would not use COGS, it would use a cogs type account titled COS< Cost of Sales. COGS, here, when you file taxes only deals with inventory sold. I would suggest you check with a tax ccountant
If you are receiving the commission back into your bank account you could create a bank deposit selecting your commission account in the account column....or you could create a Journal Entry, credit your commission account and debit your bank account.
thank you for your suggestion. Let me give you a bit of background.
We are selling a financial product, we are administrators of it so what happens we received a commission from the product provider and we pay some of this commission due to brokers for distributing of this product. So when we received the commission I record it as Sales Receipt ( I have 3 products and created 3 accounts under income). Then when we pay to brokers I use checks in QB to record these payments providing name of each client and posting the payment to COGS account as this is actually cost of goods sold. And now I have a situation when one case from one broker was cancelled but the commission was already paid to that broker. Now he needs to refund it to us. If he already did that I would just enter a deposit to reduce the COGS but the thing is that we are still waiting for it. Is there any way of showing it in QB?
The only way we would advise to record it would be as an invoice, as you mentioned, however if you are on Accrual accounting this will increase your sales - there is no official way to record this without increasing your sales.
Talia, so actually I could only create the invoice to show the funds due back and when the funds arrive I could just void the invoice/delete and enter the funds as deposit? This should be fine, shouldn't it?