You sold a print for $30 from your website! Awesome. The payment was made through PayPal which charges you 4% of the total sale. How do you book it? (Not to get confused – always remember – debits on the left and credits on the right)
PayPal disburses directly to your checking account increasing your balance by $28.80. That’s $30 less their 4% fee.
Transaction fees 1.20
This time you sold an original piece at a local art fair so you had to charge sales tax. The charge was for $450 and processed on VISA. Your sales tax rate is 7%. It takes a couple of days for your bank to process the charge and enter it into your checking account. This is the entry on the date of the sale:
Accounts receivable 481.50 (Sale + Tax)
Sales tax payable 31.50 (7% of the sale price)
The bank charged you a 4% processing fee. This is the entry to make when the bank disburses the funds to your account:
Transaction fees 19.26 (4% of the amount charged)
Accounts receivable 481.50
At the end of the month you need to file a tax return for sales tax collected during the month. When you send the return with your money this is the entry you will make:
Sales tax payable 31.50
You can consider the receivable accounts and payable accounts as “holding pens” until you actually receive or disburse cash.
To keep your bookkeeping accurate and complete you just need to think through what all the accounts are that are going to be effected by the transaction, then make sure that the left side (debits) always equals the right side (credits).