QuickBooks – Revenue Accounts

Revenue Accounts

  • 40000 Sales Revenue
  • 41000 Other Publishing Income
  • …………41100 Translation Rights Income
  • …………41200 Book Club Income
  • …………41300 Permissions Income
  • …………41400 Reprint Income

Expense Accounts

Shipping Charges

  • Shipping Expenses on Orders (shipping expense)
  • Shipping Charged to Customers (shipping revenue)

Other Revenue

  • Gain/Loss on Foreign Exchange

QuickBooks – Work in Process

The work in process (WIP) asset account records the pre-publication expenses incurred prior to a book’s publication. These costs may include cover design, layout, copyediting and proofreading expenses.

We recommend that publishers using QuickBooks create a WIP sub-account for each title in production.  The first two digits indicate that this is a WIP account, the next two digits show the estimated publication year and the last two digits specify the title.

When a book is published you credit the work in process asset account and debit the plant costs asset account. Plant costs are amortized over time.

14000 Plant Costs

15000 Work in Process

…………151201 WIP 2012 – Horse Training
…………151202 WIP 2012 – Cats 101
…………151301 WIP 2013 – Alligators
…………151302 WIP 2013 – Horned Toads 101

To automate the amortization process, create the journal entry for the first month, then right click the entry and create a memorized transaction to repeat the entry for the next X months.

 

 

 

QuickBooks – Cost of Sales Accounts

Book publisher cost of sales accounts reflect variable costs related to revenue.

Chart of Accounts

  • Cost of Sales
  • ……….50100 – Cost of Goods Sold
  • ………………50110 – Cost of Goods
  • ………………50120 – Inventory Write-Offs
  • ………………50150 – Plant Costs
  • ……….50300 – Royalty Expenses
  • ………………50310 – Royalty Expense
  • ………………50320 – Unrecoverable Advances
  • ………………50330 – Unrecoverable Royalties
  • ……….50400 – Sales Commissions

Profit & Loss Statement – Cost of Sales Section (condensed report)

Cost of Goods Sold………….$500,000
Royalty Expenses……………$200,000
Sales Commissions………….$100,000

Total Cost of Sales…………..$800,000

50200 Pre-publication Expense Amortization

Pre-publication costs paid to external third parties are capitalized under GAAP and IFRS. Internal editing costs are expensed under GAAP and capitalized under IFRS. These costs may include editing, cover design, proof-reading, and page layout.

There are two ways to capitalize prepublication expenses.

Option 1 – Include pre-publication costs in the unit cost of a product, if 75%+ of a products revenue is from physical product sales.

Option 2 – Amortize pre-publication costs over time.  You apply pre-publication costs to the asset account: pre-publication assets when the book is published (by crediting work in process and debiting pre-publication assets).  You amortize the expense by debiting plant costs and crediting pre-publication assets. Amortization of pre-publication assets start in the month of publication. Trade fiction and trade non-fiction pre-publication expenses are usually amortized over 12 months. Pre-publication expenses for a medical text that is revised every two years would likely be amortized over 24 months.

50330 – Unrecoverable Royalties

A royalty contract may have a negative balance if returns exceed sales during a royalty period.  If the negative balance will not be earned out by future sales the asset (the unearned royalties) the asset will be written off and expensed to the unrecoverable royalties expense account.