Multistep Sales Receipt Problem

Hello, ProSapien.

I'd like to share some steps about your concern.

Before doing so, please consult with your accountant to see if they have a preferred method of recording these transactions.

First, let's add an expense account that we can use later on to track the free copy of books. 

Here's how:

1. Go to Accounting > Chart of Accounts.
2. Click New.
3. For Account type, select Expenses.
4. Choose Advertising/Promotional from the Detail Type drop-down menu.
5. Enter the name (ex. Promotional/Samples-Not for Sale).
6. Hit Save and close.

Next, create an invoice for the item. This will reduce the item count in your inventory.

1. Click + New > Invoice.
2. In the Product/Service column, add the inventory item.
3. Enter the class registration fee and PayPal fee as a negative amount.
4. Choose the correct location from the Select tax rate drop-down located at the bottom right corner for the Sales tax.
5. Under the Description or Memo field, explain the action (ex. to write off Promotional Sample Invoice #).
6. Select Save and close.

Once done, record a journal entry. This helps to remove the income, credits the customer in Accounts Receivable, and credits Cost of Goods to record the Expense. Please take note that in a journal entry, you can only select the affected accounts and not the items. 

Here are the steps:

1. Go to + New > Journal Entry and set the Date.
2. On the first Line, select Sales of Product Income from the Account drop-down menu.
3. Enter the amount you are writing off in the Debits field. Under Description and Memo, type something like "To write off Promotional Sample - [insert client name]".
4. On the second Line, add the Cost of Goods Sold account for this product and enter the amount in the Credits column. The Memo field should auto-populate.
5. Under Name, select the customer's name.
6. On the third Line, choose Accounts Receivable and enter the same amount as the write-off in the Credits field. The Memo field should auto-populate.
7. Under Name, select the customer name.
8. On the fourth Line, choose the Promotional/Samples account and the amount on the Debits should auto-populate. The Memo field should auto-populate.
9. Select the customer name and hit Save. 

Finally, apply credit in the Receive payment page. 

1. Click + New > Receive Payment.
2. Select the customer's name.
3. All open transactions should be listed. Check the box beside the one(s) you want, then click Save and new. If there are no transactions, select Cancel.

For reference on the steps above, you can read this article: Write off inventory items given as promotional samples.

If you have any additional questions about the steps above, please let me know by adding a reply below. I'll be around to answer them. Take care always.

Thank you so much for the detailed explanation.

This is what I had tried to do earlier, until the second step #3:

"Enter the class registration fee and PayPal fee as a negative amount."

1- To clarify, you meant to enter the class registration fee as a positive and the PayPal fee only as a negative, correct? (That can be read to apply to both or only the PayPal fee.)

2- I cannot see a way to enter the PayPal fee on an invoice. Typically it would be added as "Commissions and Fees," but I cannot choose expense items to add to an invoice. To correctly account for the transaction, I need to show the full registration payment AND the expense due to the fee in the proper category.

Does that make sense?

I have another way on how you can add the fee, let me guide you on how to do it, ProSapien.

For your first question, yes you're correct. You can enter the class registration fee as a positive and the PayPal fee only as a negative. On the other hand for the second question, you'll have to create a service item first. Then change the income account to PayPal fees. Once you create an invoice, enter the fee as a negative amount. To do this, follow the steps below:

To create a service item:

1. Click the Gear icon, then choose Products and services. 
2. Click New, select Service. 
3. Enter the PayPal fee on the box and the rest of the information needed.
4. Click Save and close.

To enter the fee on the invoice:

1. Click + New. 
2. Select Invoice.
3. Enter the necessary information such as the Customer, address, and the total amount of the product on the first line item.
4. Enter PayPal Fee on the second line item with a negative amount.
5. Click Save and Close.

Go through this article for more information: Add Product And Service Items To QuickBooks Online. On the other hand, QuickBooks downloads the latest transactions automatically. To know more about matching transactions, I've added this article for your reference: Categorize And Match Online Bank Transactions In QuickBooks Online.

Reach out to us if there's anything else you need help with PayPal fees. The Community is here for you 24/7.