Sales Commissions Received & Paid

GCco · ‎August 25, 2020

We are a distributor for various equipment vendors. Most of our vendors sell us equipment at cost and we add a percentage on top of it to arrive at our retail price and our cost/profit ratio. However, one of our vendors includes our sales commissions as part of their cost, which they send back to us after we have paid them.

We currently record the commissions sent back to us as Sales Commission income, but the inclusion of this money throws off our project costing. To further complicate things, we share commissions 50/50 in one of our regions with a sub-rep.

My questions are:

Can I use the Category details and Item details fields when I record a Bill to capture this information?
1. EXAMPLE: We receive a bill for $1000 from this vendor. We are owed $200 back, which we will split 50/50 with our sub-rep (see attached file "Vendor Example").
  1. Can I include both income and expense accounts under Category details to capture our earned commissions and the commission payable to our sub-rep?
  2. Will this allow me to run reports on how much commission is owed to our sub-rep?

HyJohn · ‎April 07, 2021

This is how I would do this.

When recording the bill, put the $800.00 to the COGS or Expense item and put the $200.00 into a bank account (Called Commissions). When you disperse the $200.00 as commissions, you simply transfer the amount from the Commissions Bank to your Actual Bank and then pay the commissions like you normally do. This will show the commission amount on your balance sheet as cash until it is dispersed.

If you want it to show as a liability on the Balance sheet, just set up a liability account instead of a bank account. The process will be the same.

Contact me if this is not clear or you need further explanation.

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Sales Commissions Received & Paid

Sales Commissions Received & Paid

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