I have no accounting background. We sell both retail and wholesale books as a self-publisher. Our retail sales are mostly through online book sales through our website and Amazon. My question deals only with the Amazon sales.
Amazon transfers the money for the sale plus a 3.99 or 6.99 shipping fee minus their fees to our bank account periodically.
How should I record the sales and money transfers? Sometimes the actual shipping is more or less than the amount Amazon adds to the order.
I assume you are referring to a bulk payment for a span of time, and that you are treating Amazon as your customer, not the individual end consumers. I also assume you are paying your shipper directly, not through Amazon. In that case, you can receive money directly as a bank transaction or create a sales invoice based on a summary of books transacted through Amazon and then receive money against the sales invoice.
Either way, the amount for the books’ sale price is posted to an income account. This will happen automatically if you treat the books as inventory items. Shipping reimbursements (the 3.99 or 6.99 each) are entered separately, posted to an income account like Shipping cost reimbursements. Amazon fees, if shown separately and not simply deducted from the book price, can be entered as negative quantities, posted to an expense account like Sales agent fees. The net of all these things should equal the receipt into your bank account.
Because you are paying your shipper separately, that must be a separate transaction, either a payment or a purchase invoice. The fact that actual prices for shipping do not exactly match the shipping reimbursements is immaterial.
Your first paragraph assumptions assume I am further along than I am. I am just setting Manager up after using another program for several years, but I know I had never set it up well and mostly just used it to issue invoices and receive payments and track inventory. I am just recording my first retail sale which happened to come through Amazon.
I had not thought of setting up Amazon as a customer, but that might work well for us. Should it work to:
create an income account: shipping reimbursement
create an expense account: shipping
create a non-inventory item: shipping that posts to shipping reimbursement account
create an invoice for Amazon with that day’s items added and their shipping reimbursements
Then when the money is transferred, apply it to the invoices.
create an expense account: Sales Agent Fees
add a line item with a negative amount to the payment
This seems to work. Should I change anything?
That sounds correct from an accounting perspective. Other users who sell through Amazon may have suggestions, too. I hope some of them will contribute their thoughts.