Expert: Ed McFarland - 7/28/2004

Question
Hi,
First of all, I'd like to ask if you have any recommendations of a good accounting/bookkeeping book for a small business owner (using Quickbooks if that helps).

On to a more particular question:

We've just received a shipment from Taiwan of production machinery, for which we paid a deposit of $10K a few months ago.  This equipment was supposed to be shipped to us in April, but that was delayed until June, because of this they have paid the difference between the April shipping costs and June shipping costs.  The initial deposit has now been refunded to us, as well as the difference in shipping.  I'm confused as to how I should be accounting for this, as I'm not certain if I should just be invoicing them for this. I know I can just void the deposit entry to cancel it, but what about the difference in shipping?  It was also all deposited into our company account in one lump sum, so how do I account for the money coming in if I just void their deposit entry?  We use Quickbooks Basic 2004 at our company if that is at all relevant.

If I've inadvertently directed this to the wrong person, I apologize, and do please direct me to someone you believe is more appropriate.

Answer
For a book, The Dummies series are usually helpful. Also check local groups such as SCORE, the Small Business Development Center or the local chamber of commerce for suggestions on short business people classes in elements of accounting.

For the question at hand, You received a deposit back plus some expense money. They wired you $11,000 for the discussion. 10k will be credited to the deposit, you want to have a paper trail to show that this was returned money not revenue for reporting and taxes. If you actually incurred the shipping expense the remaining 1k gets credted against your shipping expense. If you didn't incur it, put it towards misc. revenues so it shows up as one-time event.

Hope this helps.