Re: Accounting related question about bonus payment

[Luke <..hidden..>]

On Thu, 21 Feb 2008, luxe wrote:

> So far, I manage my normal process: time cards -> sales order -> sales
> invoice -> payment.  But I have a special case that I am not sure how
> to handle.  My client pays me a bonus one payment a year.  In effect
> that is an extra payment that is not directly related to particular
> work done (hours) and I do not submit an invoice for that reason.
> Could somebody advise me how to enter such transaction in LSMB and how
> should look like from the accounting standards point of view.  Should
> it be entered as a General Ledger transaction?  If so, which account
> would be debit and which credit?

I would use an AR Transaction, with a general sales account or the like.  

As an example, my company routinely (as in once a month or more) receives 
residual payments from a company who's services we sell, but only in a 
promotional manner.  That is: we do the leg work, but for the final 
transaction, after market support, etc., we send the customers through a 
branded web site, phone system, or the like, which directs the business 
through the company in question.

Once a month, that company takes a percentage of the business we brought 
in, and pays it back to us as "sales commissions".  In this case, since we 
have this arrangement with several companies, and have this going on with 
a relatively high frequency, I created a "sales commissions" account, to 
which I attribute these AR Transactions.

HTH

Luke