- posted 14 years ago
Scenario: The owner of a Merchant account (credit-card processing) offers collection services to Clientele who wish to make credit card sales to their Customers.
Figures: Merchant - $100 fee for services (per order) Merchant - $65 cost for operating merchant account (per order) Clientele/Customer - $1200 sales (to keep it simple, product is sold at cost)
In English: The Merchant will collect $1200 from the Customer, and remit $1100 to the Clientele, per order. The Merchant has a cost of $65, so a GP of $35 per collection.
The questions: How is this accounted for on the Merchant's and Client's books? How much of the $1200 collected by the Merchant is considered taxable income? The entire $1200, or the $100 fee?