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To: Dwight E. Karlsen who wrote (31350)	12/28/1998 8:46:00 AM
From: Glenn D. Rudolph	Respond to of 164684

OK Glenn. I thought you were saying to credit both an Unearned Revenue account (liability) and an Other Income (Income Statement) account. With double-entry accounting, you of course can only have one debit and one credit for the same dollar amount. We are on the same page now. You could of course do a combination, for example: debit Cash $1,000 credit Unearned Revenue (liability) $600 credit Other Income (Inc. Stmt) $400 and then use an estimated Cost of Goods Sold to estimate the cost for the $400 of unredeemed certificates that will presumably be used in Q1 99. I'm sure Ms. Covey will figure something out, which will leave things thoroughly muddy. You did a fine job already. I will email her to look at your work here and she will have a good start;-) Why not separate the debit into various accounts and the credits into various account. The dollar amounts just have to be equal and no one will have a clue what happened<G> We still do not have a good breakdown of fulfillment costs from true marketing and advertising costs. Somehow I suspect some administrative costs are in the fulfillment costs or the marketing and advertising costs. Then there is the stock options to pay for some fulfillment and administrative costs. Let's not forget the credit card charges comes out of fulfillment and shipping charges to customers go into sales. Now the shipping costs comes from fulfillment but wee need a handle on the cost of good sold. The cost of good sold cannot be calculated since they may be estimated as merchandise for due bills that part of which could be in sales. We have to amortize the goodwill although that is not a real cost. I keep forgetting about the long term leases on the fulfillment and administrative centers. They are five years I believe. Are they amortized, shown as a long term liability or plain old shown as a lease expense each quarter? What about the inventory they still have even though the business model was to not carry inventory? That is shown as inventory, of course. However, what about the inventory that has not sold for six months due to no demand? The servers are purchased except some from Sun Microsystems I believe. Are they amortized or expensed at purchase? I am just starting and it is a very clear balance sheet with even a more clear profit and loss sheet. Excuse me, forget the profit part. Glenn