USA Accounting treatment of the transaction help


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Guys,

Could you please help with a potential solution as far as accounting treatment in this situation? Any help with this transactional situation is highly appreciated!
A company X which is in the business of hosting manufacturing trade shows works with a consulting firm, Y which helps with organization of the show. X received a final invoice in 2019 from Y stating that X owes Y +$300k for the 2018 show. Although X agrees that the commissions stated on the invoice are accurate, the other expenses present an issue. We can’t figure out once we credit AP for such amount, what needed to be debited to balance the entry at year-end. Since, we net our expenses (incurred by the consulting firm) out of our tradeshow revenues every year and book only revenue as JE, the only way how we think we could resolve this issue is by debiting the balance sheet account, since P/L at this point can’t be touched. However, we are not sure if and which balance sheet account we need to book this entry to.

Thank you very much and I hope to hear your suggestions and advice

Robert
(e-mail address removed)
 
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AGH the CPA

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Your details are not clear here.
Let see if I can clarify?

Assumptions:
Y commission charge $250k
Y expenses $50k

gross revenue from show $500k

entries should have been so far

DR Commission expense $250k
DR other expenses $50k
CR AP Y company $300k

DR cash/AR $500k
CR sales $500k

if this does not match what you booked, please show us the JE that were actually made.
 
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kirby

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