Inventory Consignment

Teek

@Alexia @AlanMosley @Brian @BarsinA @Annahend24_

I have a question, let say i have inventory of books which i get from a seller, who places their books in my shop of that consignment of books i am to get 35%, this is based on a sale or return,

what would be the best way for me to record this in wave, bearing in mind that if i sell 5 out of 10 books, i will pay out the money for the 5 books less 35% commission which belongs to me. Please advise on the best accounting process i should apply in wave?

Mikeg

@Teek,
You would record the commission as you receive. Since you actually do not have title to the inventory, you would not record on your books. You would record the payment to the owner as an operating expense. As an alternative, you could set up a separate income account Consignment Fees and record the gross income there and categorize the payment to the owner against the income, leaving you net fees earned.

Teek

@Mikeg thank you so much, I think I'll apply the second solution. So does it mean I would have to create an account "consignment fees" for each client I'm dealing with? With the title of the book being the distinction on the account? Or I can merely create one account Which is for all the different seller's books, where I will record the gross income (sales) against the income?

Mikeg

I would just use one sales account for all consignment sales

Teek

@Mikeg Alright thanks a lot

elementauto

@Mikeg said:
@Teek,
You would record the commission as you receive. Since you actually do not have title to the inventory, you would not record on your books. You would record the payment to the owner as an operating expense. As an alternative, you could set up a separate income account Consignment Fees and record the gross income there and categorize the payment to the owner against the income, leaving you net fees earned.

Hi, I have created an income account called consignment fees. How do i charge against that account? Do i make a separate expense called consignement fees?

Mikeg

@elementauto,
What are you trying to do? Please provide an example.

elementauto

@Mikeg
I have a small car dealership. Let's say I take a car on consgimnet. I dont want to make a bill for that vehicle, being that my customer is not a vendor nor is this a vehicle I bought.
So let's say I sell the car. I get a check, deposit it into my checking account and and label it into an income account called consignment fees (this is the gross sale price of the vehicle).
I then cut a check to the owner of that car. Minus my commission.
How do I treat payment to the person who brought me this car?

Mikeg

@elementauto,
You can classify the payment as Consignment Expense or just categorize the payment as a refund of income (against Consignment Fees). Be sure to have a paper (electronic) trail of each consignment payment.