I have a statement from a seller (Amazon) that shows a summary of the months sales, expenses and then how much they have paid into my bank account. On my accounts package, I have entered the expenses under Bills, I put the sales as a Sales invoice. So, for that customer (Amazon), they owe me money for sales, I owe them for bills and they pay me the difference.
How do I match these items together in my accounts package? Is it using credit notes or something? I need to show the bills as paid, the sales invoices received. Hope that makes sense.
I set up Amazon as a Bank account in software, rather than a supplier. What software are you using. I use Sage and that software uses nominal codes for income, expense and balance sheet entries eg sales will be one code, bank charges another. they may call them something else in your software.
I then key the sales straight to a sales nominal code. The charges can then be keyed as you would any other Bank charges. That should leave a balance - when they pay it to you, just key it as a transfer between the Amazon and your main Bank account.
You can easily check the balance on the Amazon account as you go along and complete Bank reconciliations as you would with your normal Bank account.
Doing it the way you are will mean you may have to start using journals and that gets messy. Also - now sure what you mean by credit notes but it you are not careful this could impact on your sales account in the wrong way.
HTH
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
I am using Xero. Yes, someone else suggested that method, using Amazon as a bank account. For some reason, I feel a bit uncomfortable with that method because Amazon is not a bank account. I wondered if there was a recommended method for dealing with this type of scenario, as it must be relatively common. But I suppose you are saying journal entries are the only way?
Please note, I am not an accountant but someone who has done his own accounts for years. Probably badly!
Hi
Im saying the best way is to have it as a Bank account, despite Amazon not being a Bank account. Bookkeepers and Accountants often use the 'Bank' module for such things (eg Directors Loan/Bank accounts) as its just a way of processing them a bit easier given the constraints of the software. This just makes it easier because of the way they Amazon business - what other supplier charges you fees for selling items, then monthly fees? Probably only Paypal, so most folk will probably have both as Bank accounts.
Ive never used Xero but maybe someone who does can advise. Does it have nominal codes for eg sales; postage, bank charges, purchases, wages etc? When you key from your normal Bank account can you select a nominal code for each entry you key if it isnt linked to a supplier?
Also one other point - when you say you have put the expenses under 'bills' - have you put their trading fees under 'cost of sales'?
You will need to.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Yes, Xero does have nominal codes. Someone told me I don't have to worry about putting it under COGS, so long as its under the expenses somewhere. Is that wrong? When I do a bill, I put Amazon ad costs (for example), under Advertising nominal code. Should that be under COGS instead?
I'm not sure what you mean by key from my bank account.
I heard someone talk about a "contra" entry. Is that what you mean by a journal entry?
not going to tread of jo's toes over the excellent advice that she's already given but picking up on your line about not to worry about COGS is wrong.
Think about it from the perspective of the P&L you have the top part that gives you your gross profit (sales less cost of sales) and then you have your overheads which will lead to your net profit.
If your cogs were misclassified how would you be able to analyse year on year performance? (gross profit margin is an important performance ratio).
On your seperate question on advertising, advertising tends not to be a direct cost so generally such is dropped to expenses.
A more contentious one is packaging materials. Direct cost or overhead. I record that as a direct cost.
Same with carraige. In general if its carraige outbound then it's a direct cost, if inbound then if such is attached to goods for resale its a direct cost, if not then its an expense.
When Jo said key she was indicating you using your keyboard.
Contra literally means in the opposit direction so a reversing entry. A journal can be all manner of things, not necessarily a reversal. To use journals you need to have a good knowledge of double entry bookkeeping.
HTH,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Thanks Shamus for your input. I checked again and found I made a nominal code called "Amazon fees". I see that the category was "expenses" so I have now changed that to "direct costs" so it maches the COGS category. This should mean it will act similar to a COGS category on my reports. Hopefully!
I discovered how to do what I wanted in the end. Xero suggests using their "Suspense" account and using Contra entries. I managed to do it just fine and it acts as like a very temporary bank account without me having to set one up in Xero.
Boy have I learned a lot over this past week about accounts!
Thanks Shaun!!! I agree with you about packaging and carriage. Interestingly the other one when some go wrong is with regards to the income from shipping charges. Also the item selling fees for charged by Amazon fees are COGS, but the monthly fee is an expense...it's payable whether you sell anything or not.
I'm surprised the suspense account is encouraged by Xero as mostly they are used for when you park an entry because you don't know what to do with it, rather than using the suspense account for daily transactions. I know lots of accountants who don't like to see many things pass through suspense, but as long as it's cleared quickly then I guess it's up to your accountant.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
I agree with you about packaging and carriage. Interestingly the other one when some go wrong is with regards to the income from shipping charges. Also the item selling fees for charged by Amazon fees are COGS, but the monthly fee is an expense...it's payable whether you sell anything or not. 
