QuickBooks for auction business

I had a case, an
auction house was considering of using QuickBooks for their business. So, how
can QuickBooks fit into an auction business?

The main source
of income for my client was commission. They earn commission from both Customer
and Vendor (either the gallery or artist).

They will buy
insurance for the ‘goods’ when they received the ‘goods’ from the vendor. Hence, Bill will be entering in QuickBooks.
The insurance paid will be claim from the vendor if ‘goods’ was being sold
during auction.

After ‘goods’
was successfully auctioned they will create invoice to the client. The double
entry for this invoice will be:

    Debiting
Accounts Receivable account

Crediting Hammer
Price account (Other Current Liability account)

Crediting
Shipping Charge Income (Income account)

Crediting
Commission Income (Income account)

Then, upon
receiving customer payment, they will pay back the vendor after less out the charges,
the double entry for this transaction will be:

    Debiting Hammer
Price (Other Current Liability account)

Crediting
Insurance expense account (Claimable expenses)

Crediting other
claimable expenses account

Crediting
Commission Income account

Crediting
Account Payable account

The Hammer Price
account should be zero once you have recorded the general journal.

You cannot
classify the Hammer Price as an income account as this is not your actual
source of income, thus, you should consider classify them as Other Current
Liability type of account. Besides, General Journal need to pass to less off
the expenses paid (Insurance or other charges) from the vendor’s account (less
off the Hammer Price amount before returned to Vendor) unless you absorb the
costs incurred.

The above could be a
solution for a simple auction house to use QuickBooks for their business.

Hope the above
information is useful to you. 

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