Layaway Accounting Flow

Below are details on the accounting that takes place for layaways in Bravo. All numbers and values within this article are for example purposes only.

Footnotes:

* Sales account determined by taxable/non-taxable and item category
† COGS, Inventory accounts determined by item category
‡ VAT for countries with VAT only
†† any other account depending on the transaction specifics including COH or Store Credit

Outstanding inventory balance includes the following status codes:

New Layaway Example:
A customer puts an item on layaway for $100 plus $8 tax. The item cost the store $20, and the customer pays a $10 deposit. The system records the deposit as a liability (Layaway Holding), moves the item out of regular inventory into Layaway Inventory, and adds the $10 to the store’s cash.

Account	Dr/Cr	Amount	Debit	Credit
Layaway Holding	Cr	Deposit Amount		10
Inventory †	Cr	Item Cost		20
Layaway Inventory †	Dr	Item Cost	20
any other ††	Dr	Deposit Amount	10

Layaway Payment Example:
A customer makes a $25 payment toward their layaway. This amount is credited to Layaway Holding to track what’s been paid and debited from the store’s cash account, reflecting the increase in cash received.

Account	Dr/Cr	Amount	Debit	Credit
Layaway Holding	Cr	Payment Amount		25
any other ††	Dr	Payment Amount	25

Final Layaway Payment Example:
A customer makes their final $78 payment toward a $100 layaway (with $8 tax and $20 item cost). The system records the full sale and tax amounts, recognizes the item’s cost, moves it out of Layaway Inventory, and finalizes the transaction.

Account	Dr/Cr	Amount	Debit	Credit
Layaway Holding	Cr	Payment Amount		78
Layaway Holding	Dr	Item Sale Amount	100
Layaway Holding	Dr	Tax Amount	8
Sales *	Cr	Item Sale Amount		100
COGS †	Dr	Item Cost	20
Layaway Inventory †	Cr	Item Cost		20
Sales Tax	Cr	Tax Amount		8
VAT Basis ‡	Dr
Sales - VAT Profit ‡	Cr
any other ††	Dr	Payment Amount	78

Final Layaway Payment with Firearm Hold Example:
A customer makes their final $78 payment toward a $100 firearm layaway (with $8 tax and $20 item cost). The system records the full sale and tax amounts, recognizes the item’s cost, and moves it out of Layaway Inventory—but because it’s a firearm, the item remains on hold until the background check is completed.

Account	Dr/Cr	Amount	Debit	Credit
Layaway Holding	Cr	Payment Amount		78
Layaway Holding	Dr	Item Sale Amount	100
Layaway Holding	Dr	Tax Amount	8
Inventory †	Dr	Item Cost	20
Layaway Inventory †	Cr	Item Cost		20
Sales *	Cr	Item Sale Amount		100
Sales Tax	Cr	Tax Amount		8
VAT Basis ‡	Dr	Tax Basis
Sales - VAT Profit ‡	Cr	Tax Basis - Tax Amount
any other ††	Dr	Payment Amount	78

Final Layaway Payment – Consignment Item Example:
A customer makes their final $78 payment toward a $100 layaway (with $8 tax and a $60 consignment commission). The system records the full sale and tax amounts, calculates the store’s earnings, and creates a payable for the consignor’s share. The item is sold, and payment is finalized.

Account	Dr/Cr	Amount	Debit	Credit
Layaway Holding	Cr	Payment Amount		78
Layaway Holding	Dr	Item Sale Amount	100
Layaway Holding	Dr	Tax Amount	8
Sales *	Cr	Item Sale Amount		100
COGS †	Dr	Consignment commission	60
Consignment Payable	Cr	Consignment commission		60
Sales Tax	Cr	Tax Amount		8
VAT Basis ‡	Dr	Tax Basis
Sales - VAT Profit ‡	Cr	Tax Basis - Tax Amount
any other ††	Dr	Payment Amount	78

Layaway Cancel Example:
A customer cancels a layaway after making $35 in payments on an item with a $20 cost. The system moves the item back to regular inventory, releases the payments from Layaway Holding, and recognizes the store’s income or forfeiture from the cancellation.

Account	Dr/Cr	Amount	Debit	Credit
Layaway Holding	Dr	Total of payments	35
Inventory †	Dr	Item Cost	20
Layaway Inventory †	Cr	Item Cost		20
any other ††	Cr	Total of payments		35

Layaway Expiration (with Credit Issued) Example:
A layaway expires after the customer made $35 in payments on an item with a $20 cost and a $2 restocking fee. The system moves the item back to inventory, deducts the restock fee, and issues a $33 store credit for the remaining payment balance.

Account	Dr/Cr	Amount	Debit	Credit
Inventory †	Dr	Item Cost	20
Layaway Inventory †	Cr	Item Cost		20
Layaway Holding	Dr	Restock Fee	2.00
Layaway Restock Fee	Cr	Restock Fee		2
Layaway Holding	Dr	Total of payments	33.00
Expired Layaway Credit	Cr	Total of payments		33

Layaway Expiration (No Credit Issued) Example:
A layaway expires after the customer made $35 in payments on an item with a $20 cost. The system moves the item back to inventory and records the full $35 as restocking fee revenue, with no store credit issued to the customer.

Account	Dr/Cr	Amount	Debit	Credit
Inventory†	Dr	Item Cost	20
Layaway Inventory†	Cr	Item Cost		20
Layaway Holding	Dr	Total of Payments	35
Layaway Restock Fee	Cr	Total of Payments		35

Layaway Credit Use Example:
A customer uses $33 in store credit that was issued from a previously expired layaway. The system reduces the Expired Layaway Credit balance and applies it toward the new transaction, reflecting the credit as payment.

Account	Dr/Cr	Amount	Debit	Credit
Expired Layaway Credit	Dr	Credit Used	33
any other ††	Cr	Credit Used		33

Update On: 10/31/2015

Layaway Accounting Flow

This article provides a detailed breakdown of how layaway transactions are recorded in Bravo's accounting system, covering various scenarios such as new layaways, payments, cancellations, expirations, and consignment items.