Cloudbook365 › Case study › E-commerce
Illustrative example · E-commerce
Amazon, Shopify and PayPal, reconciled into one set of books
Ridgeline Outdoor Supply LLC (sample engagement). An outdoor-gear seller on Shopify and Amazon, books in QuickBooks Online, January to March 2026, accrual basis. Full cycle from setup to management reporting.
This is a sample. Ridgeline is a fictional business built to show our workflow, and every figure is illustrative. On a real engagement you would see the same structure built from your own data.
The problem
The problem with marketplace money
Neither Amazon nor Shopify pays you what you sold. Amazon pays net of referral and FBA fees, refunds, promotions and reserves. Shopify pays out through two routes, card payments and PayPal, on different schedules. If each deposit is booked as income, gross sales, fees and returns disappear and the bank never ties to the sales reports.
Our fix is a clearing account for every channel. Sales and fees post there first, each payout is then transferred out to the bank, and a clearing balance that is not zero shows exactly what is unreconciled.
How the work runs
| Stage | What happens |
|---|---|
| 1. Set up | Chart of accounts by channel, clearing accounts for Amazon, Shopify card payments and Shopify PayPal, products and inventory, payroll liabilities, opening balances. |
| 2. Collect | Bank, card and PayPal activity, Amazon settlement reports, Shopify sales and payout reports, payroll summary, loan schedule, inventory report. |
| 3. Record | One journal per Amazon settlement and per Shopify month, payroll, loan receipt and repayments, then categorization of the bank, card and PayPal feeds. |
| 4. Reconcile | Payouts moved to the bank from each clearing account, PayPal matched to Shopify, then bank, card and PayPal accounts reconciled to statements. |
| 5. Report | Trial balance review, then P&L, balance sheet, cash flow statement and a KPI page with observations. |
In the books
What a settlement looks like
Two sample entries, each broken out so fees and returns stay visible.
| Amazon settlement journal | Debit | Credit |
|---|---|---|
| Amazon sales | $1,120.00 | |
| Shipping income | $14.00 | |
| Refunds | $96.00 | |
| Promo rebates | $31.00 | |
| FBA fees | $22.00 | |
| Amazon referral fees | $169.00 | |
| Amazon clearing (net payout) | $816.00 | |
| Total | $1,134.00 | $1,134.00 |
| Shopify monthly journal | Debit | Credit |
|---|---|---|
| Gross sales | $21,300.00 | |
| Shipping income | $430.00 | |
| Discounts | $410.00 | |
| Returns | $1,090.00 | |
| Shopify card payments clearing | $11,980.00 | |
| Shopify PayPal clearing | $8,250.00 | |
| Total | $21,730.00 | $21,730.00 |
The reports
Profit and loss, and balance sheet
| Profit and loss, Q1 2026 | Amount |
|---|---|
| Shopify net income (after discounts and returns, plus shipping) | $58,400 |
| Amazon net income (after returns and promo rebates) | $13,740 |
| Total net income | $72,140 |
| Cost of goods sold | $28,400 |
| Amazon referral and FBA fees | $3,570 |
| Gross profit | $40,170 |
| Payroll and payroll taxes | $15,660 |
| Advertising and marketing | $6,900 |
| Shopify, PayPal and bank fees | $2,860 |
| Software, packaging, accounting and other overhead | $2,980 |
| Net operating income | $11,770 |
| Loan interest | $540 |
| Net income | $11,230 |
| Balance sheet, March 31, 2026 | Amount |
|---|---|
| Bank, PayPal and Amazon clearing | $28,930 |
| Inventory | $31,500 |
| Equipment | $750 |
| Total assets | $61,180 |
| Credit card, payroll liabilities and sales tax payable | $5,370 |
| Long-term business loan | $18,000 |
| Total liabilities | $23,370 |
| Equity, including Q1 net income of $11,230 | $37,810 |
| Liabilities and equity | $61,180 |
The cash flow statement is delivered with the P&L and balance sheet in the full package.
For the owner
What the owner gets to read
| Indicator | Q1 | What it tells you |
|---|---|---|
| Gross margin | 55.7% | Product margin after Amazon fees. |
| Net margin | 15.6% | What is left after payroll, ads and overhead. |
| Operating expense ratio | 39.4% | Payroll is the largest piece, then advertising. |
| Advertising share of sales | 9.6% | $6,900 of ad spend on $72,140 of sales. |
| Working capital | $55,060 | Mostly inventory and cash. |
| Debt to assets | 38.2% | Driven by the $18,000 loan. |
Three observations from the numbers
01
Amazon is the expensive channel
It brings 19% of net sales, and its fees take 26.0% of Amazon net income. Shopify and PayPal fees take about 4.7% of Shopify’s. Check margin by product before putting more advertising behind Amazon.
02
Returns are 5% to 6% of sales
Returns run at 5% to 6% of gross sales on both channels: Shopify is 5.2% and Amazon 6.1%. That is worth a look at the products and descriptions behind them.
03
Stock is about 100 days deep
At the Q1 sales pace, inventory ties up cash that could cover ads or loan repayments.
This work covers bookkeeping, reconciliation and reporting. It does not include tax return preparation, tax advice, legal advice or audit.
More case studies
See your own channels reconciled
Book a free consultation and we will show you where to start.