Accounting for barter transactions

If you are part of an organized barter exchange, you will receive barter-dollar statements that will look much like bank statements. The only difference in the accounting is that you will set up a separate asset account to account for the barter dollars. When you receive or pay barter dollars, you will debit or credit that account. You will also reconcile it just as you would a regular bank account.

If you're not part of an organized exchange, the accounting gets a little more difficult. You must first decide the value of the transaction. For example, if you have a pool maintenance company and you provide pool cleaning services to your neighbor in exchange for landscaping services for your office building, the value of the transaction is the value of the service provided, or, if that can't be determined, the value of the service received. In this example, let's say that you normally charge $125 for the pool cleaning (ignore taxes for now). That would be the value of the transaction. You would make the following entry in your books:

 

            DR     Landscaping expense            $125.00

            CR     Revenue                                                $125.00

 

If the service provided to you is for personal purposes, like landscaping at your home, you would debit the shareholder loan account (or the owner's equity account in the case of an unincorporated business) instead.