We are often asked how to find out how many tickets were paid for using the various payment method such as Visa, Master Card, cash, etc. There is a need to do so to calculate discounts for royalty deductions, or to charge back to renters a portion of the ticket sale when their patrons use credit cards. There is a way to find an approximate answer for business purposes. There is no way to find an exact answer of '1 ticket paid for by visa' as will be illustrated in the example below.

Getting a reasonable approximation

The reasonable answer can be obtained using the 'Revenues by Payment Method-Ticket Based' report or looking at one of the royalty reports. The general process for these reports are to:

• Run the 'Receivables-Based on Order Balances by Event' to see if anybody owes you money for the event. If there are any receivables, clear them out or pay them off
• Find all the orders for the tickets you need the answer for. e.g. you may want to do the calculation for all tickets sold to a particular show at the end of the run to obtain credit card discounts paid - and which can be deducted from royalty payments
• Theatre Manager then finds all the payment methods for the orders and allocates the payment method amongst the tickets in the order.
• The allocation is then printed on the report. Please refer to the examples below to see how this might work

Why cant the number be exact?

Lets use a simple example of why the question being asked is not available in ANY accounting system. i.e. specifically what payment method paid for an item out of inventory is simply not possible in any accounting system. It can be inferred, but there is no way of ascertaining 'fact'. (you won't find an answer in quickbooks that event attempts to do this). First, Theatre Manager uses accrual accounting. This, at its simplest, means that each payment decreases accounts receivable. Each purchase increases accounts receivable. In a perfect world of buy one ticket for $10 and pay $10 in cash, it can be inferred that 1 ticket was paid for with cash.

What if the transaction gets complicated?

Lets use a more real world example. Suppose a patron buys a play pass for $100 and donates $50 at the same time. He is sharing the pass with a friend, so you get paid $50 from the friend by visa (the friend donated separately earlier in the year) and the patron pays $100 with Mastercard. Question: how many tickets were paid with by visa at this time? Answer: it could be inferred

• none because it is a play pass an they are not yet used.
• In fact, if they are never used, then the answer will be zero.
• A possible answer is 50/150 = 33% of the pass because that is the exact ratio of payments made on this order and you really don't know the patrons intent.
• A possible answer is 50/100, if you knew the patrons intent.

So far, there are 4 possible answers at the get go of the transactions. All, are in fact wrong. The simple answer is that when the pass was purchased, it increased receivables because something was sold from inventory. And the payment deceased the receivable. Lets suppose time progresses and the patron starts to use the pass to buy tickets. At this time, the payment method for the ticket is part of the pass and we are now a few steps removed from the original transaction. And a patron can pass around the pass to other patrons to complicate things. Finally, the patron may decide that they can't use all the pass, so they turn it in for a donation receipt. These transaction happens with amazing regularity at any theatre company.

How do other industries do this?

The answer is: they don't. If you picked another industry such as a lumber store where you buy some lumber, some screws, a new power tool and pay with a gift certificate you got for christmas and top it up with some cash in your pocket and then use a debit card, you could be asking the same question. Did my gift certificate pay for my cool power tool, or did it pay for my screws? again, the answer is: YOU CANT PROVIDE AN EXACT ANSWER OF WHAT PAID FOR EACH INDIVIDUAL PIECE OF INVENTORY.

Summary

• In an inventory management system, it is never possible to clearly determine how each item removed from inventory is paid for.
• There is no accounting system that we know of that provides this capability in any of its reports
• Theatre Manager recognizes that there is an advantage to being able to approximate the answer with a degree of precision and provides report to allocate payments to tickets at the end of a run for purposes of royalty deductions. These are accurate to 4 decimal places and fractions of tickets

Please verify this with your accountant or auditor if you need further clarity.