How to Record a Barter Transaction in Brass Jacks Bookkeeper
A barter transaction occurs when your business and another business exchange goods or services instead of paying each other with cash.
For example, you might provide $500 of services to a vendor, while that vendor provides $500 of goods or services to you. You can record both sides of the exchange in Brass Jacks Bookkeeper so your income and expenses are properly recorded.
The process involves:
Setting up a barter bank account
Creating an invoice for what you provided
Receiving payment on that invoice
Creating a bill for what you received
Paying the bill from the barter bank account
Step 1: Set Up a Barter Bank Account
First, create a bank account in Brass Jacks Bookkeeper to track the barter activity.
Go to Banking > Setup Bank Accounts
Click Add.
Set the account type to Checking.
Name the Account Description something like Barter Account.
Click OK to save the account.
You are not creating an actual bank account. This is simply a clearing account that allows you to record the exchange without using your actual checking account.
Step 2: Create an Invoice for What You Provided
Create an invoice for the goods or services your business provided to your barter partner.
Go to Sales > Create Invoices.
Select the customer who received your goods or services.
Enter the goods or services you provided and the amount.
Click Save.
The invoice records the income your business earned from the barter transaction.
Important: Your barter partner needs to be set up as a customer for the invoice and as a vendor for the bill.
Step 3: Receive Payment on the Invoice
Because no cash is actually changing hands, record the payment as being deposited into your barter account.
Ensure that your Current bank account is the Barter Account.
Go to Sales > Receive Payments.
Enter the date of the barter transaction.
Select the Customer you are bartering with.
Enter the amount of the invoice being settled.
Select Other as the payment method.
Apply the payment to the invoice.
Click Save.
The invoice is now paid, and the amount is recorded in your Barter Account.
Step 4: Enter a Bill for What You Received
Next, record the goods or services your business received from the barter partner.
Go to Payables > Enter Bills.
Select the vendor.
Enter the date of the transaction.
Select the appropriate expense account for the goods or services you received.
Enter the amount of the bill.
Click Save.
The bill records the expense or other cost your business incurred from the barter transaction.
Step 5: Pay the Bill from the Barter Account
Now settle the bill using the same Barter Account.
Go to Payables > Pay Bills.
Select the bill you just entered. the Barter Account as the payment account.
Select ACH/EFT for the payment method.
Click OK.
In the next screen ensure that Barter Account is selected as the Bank Account.
6. Click Save.
The bill is now paid using the balance created in the Barter Account.
What Happens to the Barter Account?
When the amounts you exchanged are equal, the activity in the Barter Account should offset.
For example:
You provide $500 of services → create a $500 invoice.
You receive $500 of services → create a $500 bill.
You receive $500 against your invoice → Barter Account increases by $500.
You pay the $500 bill from the Barter Account → Barter Account decreases by $500.
The result is a record of both the income you earned and the expense or other cost you incurred, without affecting your actual checking account.
What If the Amounts Aren't Equal?
If the two sides of the barter exchange have different values, the Barter Account will have a remaining balance.
For example, if you provide $500 of services but receive only $400 of goods or services, there will be a $100 difference that will need to be handled according to the terms of the exchange.
For tax and accounting purposes, make sure the amounts and accounts you use accurately reflect what was actually exchanged.
