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Posted by Laura on January 21, 2008, 6:16 pm
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> Laura wrote:
>>> Allan Martin wrote:
>>>>
>>>>> How would be suitable way to record deductible costs from royalty
>>>>> payments when they're deposited? Can't use a deduction at that point
>>>>> as the 1099 is issued w/ gross so must reflect that for proper tax
>>>>> reporting but doesn't seem any way to split a portion to the
>>>>> production cost account...
>>>>
>>>> Do you think anyone actually knows what you are talking about?
>>>
>>> Well, I had hoped... :)
>>>
>>> I'll try the steps and see where it leads...
>>>
>>> Receive royalty payments (oil/gas production (report on Sch E))
>>> Deposit _net_ proceeds in account as income
>>> Year end receive 1099 which shows gross amount in excess of net (gross
>>> amount less production expenses withheld by producer)
>>>
>>> Question was, how to make an account that reflects the above
>>> transaction.
>>> What I was trying to resolve is how to make the accounts reflect the
>>> total gross receipts match the year-end 1099 and still have the bank
>>> balance correct for the net amount actually deposited.
>>>
>>> What I figured out since the post that _seems_ to work is to deposit the
>>> total and enter the costs as a negative amount to the cost account in
>>> the deposit register.
>>>
>>> Is the situation any more clear now and would you see a "more better"
>>> way?
>>
>> Create an expense account called Production Expenses and an Item that
>> points to this new account. Use a sales receipt for the gross amount to
>> Royalty Income (to match 1099 received) as the first line of the SR. On
>> the second line post a negative amount for the amount of Production
>> expenses withheld using the Production expense Item. You will end up with
>> the net amount in your bank, your income account will reflect the gross
>> income received and the Production expense will be in a separate account
>> to offset your income. Does this make sense to you?
>
> Hmmm, ok, but seems more effort to the same end than simply posting the
> split on the banking register... :)
>
> To do the cash sale would have to make the Royalty Income acct a customer?
> That doesn't seem right somehow...
You could use the register with or without a customer name. It depends on
whether you want to be able to run reports on the royalty amounts.
Since this is income to you there is nothing wrong with entering the royalty
company as a customer in your QB file.
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