Non Profit Recognation of Revenue in a Coop

USA Discussion in 'General Accountancy Discussion' started by RJR6357, Nov 8, 2018.

  1. RJR6357


    Nov 8, 2018
    Likes Received:
    I am working with a not for profit doing the end of year financials and 990. They are a group of Artist who have a coop where they all display artwork. When an item is sold it go through the register to square. Then when the manager receives the message from square to make the deposit she authorizes it. I have four places the money received goes.

    1. CC fees to square (Not seen at all, but on the statement from square)
    2 Sales tax which the previous accountant did not have on the income statement or balance sheet.
    3 Commission for the sale to the gallery which is a percentage of the sales price.
    4 payment to the artist who piece it was.

    Now, the old accountant was recording the sale as income on the income statement as it should be.
    They also took the payments from the income part of the income statement as a negative and recorded it as payment to artist.

    How I feel it should be is:

    CC fees are an expense and should be recorded as so. In the expense area of the income statement.
    Sales tax is a payable and once paid expensed.
    Commissions are gallery income and recorded in the income part of the income statement or payable.
    Payment to artist is also an expense which should be recorded on the expense part of the income statement, or paid out of the payable account.

    I keep going back and forth about these issues. The old accountant did things one way but yet never recording the entire pieces of the sale. There is no payable account for sales tax and no listing of the credit card fees.

    By putting the gross sale as income it make the gallery recognize a higher level of oncome, which they are only passing it through like the sales tax. I feel the Sales should be a payable and then payed out to the artist similar to the sales tax.

    Does anyone have what the correct way is for recording the sale whether using the payable account or income and expense or just the income account?
    RJR6357, Nov 8, 2018
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  2. RJR6357

    AGH the CPA

    Jun 16, 2017
    Likes Received:
    assuming these facts
    sale 100
    sales tax 5
    total charged 105
    cc fee 3
    commission rate 20%

    this is how I would handle it

    when sale is made
    DR bank 102
    DR cc fees 3
    CR sales tax liability 5
    CR artist 1 liabilty 80
    CR gallery sales commission 20

    paying sales tax
    DR sales tax liability 5
    CR bank 5

    paying artist
    DR artist 1 liability 80
    CR bank 80
    AGH the CPA, Nov 30, 2018
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