[Study] Double Entry for e-commerce purchase

[WilLLS]

Hi all, i am from IT background, completing my last degree subject of developing an e-commerce website. But at work i am supporting accounting system, so i am very keen to learn double entry. Your feedback is highly appreciated.

Step One: Customer buy a product at $60 from the e-commerce site. (Customer pay to paypal, not directly to the company).
Debit Account Receivable :$60.
Credit Income (dummy) :$60.

Step Two: One day later, paypal transfer the money to the company bank account with 2% transaction fee deducted.
Debit Bank : $58.8
Debit Paypal trasaction fees (expense account) : $1.2
Credit Account Receivable : $60

Step Three: Record the Income.
Debit Income (dummy) : $60.
Credit Income : $60.

Is above double entry make sense for the above scenarios? Is it acceptable? Any feedback and comment is highly appreciated.

Thanks much in advanced.

Regards,
Wil.

 

[Samir]

I think you're close.

You have to think of it this way--whether or not you get the cc payment in the bank account, you still made the sale. So once you record the sale, it is there unless you credit it or write it off later.

Debit CC Receivable: $60
Credit Income: $60

The next step would involve you finally getting the payment, which you nailed.

Debit Bank : $58.8
Debit Paypal trasaction fees (expense account) : $1.2
Credit CC Receivable: $60

And that's it. If you want to know how much you have outstanding in credit card payments, you just check the balance of the CC Receivable account. In the scenario you detailed with two income accounts, the difference between the two accounts would be the same as the balance of the CC Receivable account, but would require that subtraction step (unnecessary).

Make sense?