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Example Ledger

This page details an example marketplace order and how journal entries are recorded into the ledger system, with two fulfillments completed at different times. Each section corresponds to an event triggering a journal entry within the ledger, highlighting the credited and debited ledger accounts at each stage.

Scenario​

The following scenario applies to this example:

  • The marketplace has an agreement with their sellers to collect a 10% commission on each order, plus a $5 flat-rate fee.
  • The seller accrues shipping revenue.
  • The marketplace's revenue accrual mode is set to accrue on fulfillment.
  • The marketplace authorizes credit card payments before capturing them manually.

1. Order placed​

Upon placing an order, the ledger is updated with the following:

Order placed ledger entriesOrder placed ledger entries

  • Deferred sales revenue is credited for the net product prices of $1,300, indicating revenue that the marketplace expects but can only recognize once the order is fulfilled.

  • Deferred shipping revenue is credited with $10. This is the shipping charge that will be recognized as revenue upon fulfillment of the order.

  • Sales tax is credited with $65.50, reflecting the sales tax collected on the order that the marketplace must remit to the tax authorities.

  • Customer receivable is debited with $1,375.50, representing the total amount the customer owes for the transaction, including the product cost, shipping, and tax.

note

If the marketplace automatically captured credit card payments, this transaction would instead debit the Funds - payments account.

2. Payment captured​

After capturing payment, the ledger is updated with the following:

Payment captured ledger entriesPayment captured ledger entries

  • Customer receivable is credited with the order total of $1,375.50, indicating that the payment has settled the customer's debt.

  • Funds - payments is debited with the order total of $1,375.50, indicating that the payment has been processed and the funds have been added to the marketplace's assets.

3. Partial fulfillment​

Upon partial fulfillment of an order, revenue accrues for the fulfilled products and any associated commission. Fees related to the order, such as shipping and marketplace fees, are also accrued at the time of this initial fulfillment.

3.1 Order accrued​

Revenue is accrued and allocated to the seller for the fulfilled items:

Order accrued ledger entriesOrder accrued ledger entries

  • Deferred sales revenue is debited with $1,000, which moves part of the revenue from deferred to earned, reflecting the value of the fulfilled products. A balance of $300 credit remains as unrecognized revenue due to unfulfilled items.

  • Seller payable is credited with $1,000, representing the accrued revenue payable to the seller.

3.2 Commission​

The marketplace operator's commission is calculated for the fulfilled items:

Commission ledger entriesCommission ledger entries

  • Seller payable is debited $100, reducing the amount the marketplace owes to its sellers.

  • Marketplace commission is credited $100 for the marketplace's 10% commission on the value of the fulfilled products.

3.3 Fees​

Upon the first fulfillment, the marketplace operator's order fee is accrued:

Fee ledger entriesFee ledger entries

  • Seller payable is debited $5, reducing the amount the marketplace owes to its sellers.

  • Marketplace fees is credited $5, according to the order fee defined in their agreement with their sellers.

3.4 Shipping accrued​

Upon the first fulfillment, the shipping fee is earned and allocated to the party accruing shipping:

Shipping accrued ledger entriesShipping accrued ledger entries

  • Deferred shipping revenue is debited $10, moving the shipping revenue from deferred to earned.

  • Seller payable is credited $10, increasing the seller's payout for their earned shipping revenue.

4. Complete fulfillment​

Upon fulfilling the rest of the order, revenue accrues for the newly fulfilled products and the commission for those products.

4.1 Order accrued​

The remaining sales revenue is accrued and allocated to the seller's payout balance:

Order accrued ledger entriesOrder accrued ledger entries

  • Deferred sales revenue is debited with $300, which moves the remainder of the revenue from deferred to earned and balances out the deferred sales revenue to $0.

  • Seller payable is credited with $1,000, representing the accrued revenue for the seller.

4.2 Commission​

Commission for the newly fulfilled items is accrued and allocated to the marketplace commission account:

Commission ledger entriesCommission ledger entries

  • Seller payable is debited $30, reducing the amount the marketplace owes to its sellers.

  • Marketplace commission is credited $30 for the marketplace's 10% commission on the value of the fulfilled products.

5. Seller payout​

After processing a payout to the seller, the ledger is updated with the following:

Payout ledger entriesPayout ledger entries

  • Seller payable is debited the payout total of $1,175, balancing the seller payable to $0.

  • Seller payout disbursement is credited the $1,175 paid out to the seller.

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