Cash held at auction house.

stevehere · ‎September 02, 2023

We buy and sell online. At one auction house we do business with we have to send a deposit in order to use their services. If we are a winning bidder, that auction house charges 5% from that deposit and we wire the balance to them.
So, for example. We put an ACH payment of $1000 into our account at the auction house. That comes from our checking account. We win an item at auction and we spend $2000. We pay 5% ($100) from our deposit. Then wire the balance of $1900.
So Quickbooks shows a wire for $1900 but the invoice from the auction house says $2000
With a $900 balance left in their account.
How do I show that 5%/$100, is it a cash transaction? I am having issues reconciling the 5%.
Thank you

Rainflurry · ‎September 02, 2023

@stevehere

@AbegailS_ 's answer is how to reconcile your bank account - not how to account for the 5% payment. It fails to take into account that you need to show that you still have $900 on deposit with the auction house.

There are a couple of ways this can be handled. The $1,000 transfer to the auction house can be recorded as a transfer from your bank account (Banking > Transfer Funds) to another bank account in QB called "Auction House Deposit" (set one up if you don't have one). Then, when you get the bill from the auction house, pay it down by $100 from the Auction House Deposit account and the remaining $1,900 from your bank account. You now have $900 remaining in the Auction House Deposit account.

Or, you can assign Accounts Payable to the $1,000 ACH transfer to the auction house. Make sure to assign the auction house under 'Name' on the payment. This will give you a $1,000 credit with the auction house. You can apply $100 of that credit to the auction house's $2,000 bill and pay the remaining $1,900 from your bank account. You now have a $900 credit remaining with the auction house.

View solution in original post

AbegailS_ · ‎September 02, 2023

Hi there, Steven.

I understand the importance of transparency in your financial transactions. I'm here to assist you with your concern about the issue when reconciling your account with the 5% auction house charge.

When reconciling your account, there is no need to specifically search for the $100 (5%) charge from the auction house on your bank statement. Instead, you focus on identifying the actual money-out transactions: the initial deposit of $1000 and the subsequent wire transfer of $1900. The deduction of the 5% charge has already been accounted for within the deposit amount of $1000.

Once everything is in order, you may proceed with reconciling your bank account.

You may find this article helpful in case your accounts in QuickBooks Desktop don't match your bank statements at the end of reconciliation: Fix issues when you're reconciling in QuickBooks Desktop

Should you need more assistance with QuickBooks, feel free to comment below. I'm always around to take care of all your needs. Keep safe.

stevehere · ‎September 02, 2023

Thank you.

Rainflurry · ‎September 02, 2023

@stevehere

@AbegailS_ 's answer is how to reconcile your bank account - not how to account for the 5% payment. It fails to take into account that you need to show that you still have $900 on deposit with the auction house.

There are a couple of ways this can be handled. The $1,000 transfer to the auction house can be recorded as a transfer from your bank account (Banking > Transfer Funds) to another bank account in QB called "Auction House Deposit" (set one up if you don't have one). Then, when you get the bill from the auction house, pay it down by $100 from the Auction House Deposit account and the remaining $1,900 from your bank account. You now have $900 remaining in the Auction House Deposit account.

Or, you can assign Accounts Payable to the $1,000 ACH transfer to the auction house. Make sure to assign the auction house under 'Name' on the payment. This will give you a $1,000 credit with the auction house. You can apply $100 of that credit to the auction house's $2,000 bill and pay the remaining $1,900 from your bank account. You now have a $900 credit remaining with the auction house.

stevehere · ‎September 16, 2023

Thank you for this reply. I tried doing it the same way you suggested, under the create a bank account for that auction house and it works. Easier than I was expecting.
Real big thank you.

AlcaeusF · ‎September 19, 2023

Hello Rainflurry,

I have reviewed the solution you’ve shared and it's correct and accurate. Thank you for sharing your inputs to help address the issue.

We love to see members supporting one another! Have a great day.

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