USA 1099 Non-employee Direct sales handling of debits and credits

Nov 17, 2022
Reaction score
United States
I have a good grasp on how to handle some of the entries. But I am looking for confirmation on how I would make these entries into the general ledger.

I buy and sell directly and indirectly of inventory from the company. I make a commission from the sales of the inventory both directly and indirectly. Indirectly is a straight commission. When I sell directly I get to keep the suggested retail value of the item. Example, I buy item A at $15.00 and sell at $30.00 plus shipping of $5.00 and sales tax of $1.00 then I gave a $3.00 discount (just because) for a total amount of $33.00 collected. This $33.00 is then "deposited" into my back office account (an asset in a way not an actual bank account). Then merchant account fees and sales taxes are paid from that. Again simplicity sake $1.00 for fees and $1.00 for sales taxes are paid (taken from the back office account. This leaves a net of $31.00 which then is deposited to my actual bank account every Friday.

The way I see me entering general ledger journal entries would be as follows.
Sales - income (db) $30.00
Discounts - income (cr) $3.00
Sales Tax - liability (cr) $1.00 (collected sales tax to be paid)
Shipping - income (db) 5.00
Sales Tax - liability (db) $1.00 (collected sales tax that was paid)
Merchant Account Fees - expenses (db) $1.00
Back Office Account - asset (db) $31.00

But if you are supposed to have equal entries of debits and credits this is not equal. I don't know if I have explained it correctly or well enough. Any insight to do these entries would be helpful.

Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question

Members online

No members online now.

Forum statistics

Latest member

Latest Threads