Cost Of Goods Sold Bookkeeping Question

by Phyllis
(North Bergen, New Jersey)

Cost of Goods Sold

Cost of Goods Sold

I have a restaurant equipment company.

When I buy equipment to sell do I put it under cost of goods sold?

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Apr 08, 2011
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COGS
by: Stephanie

Hi Phyliis,

Yes, equipment that you purchase in order to resell should be put under Cost of Goods Sold subaccount of Purchases.

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Cost of Goods Sold

When purchasing equipment does it go under cost of good sold?

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Oct 29, 2012
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COGS Equipment Posting
by: Anonymous

When you purchase equipment it is a Capital asset and is posted in an account named "equipment". It is good to add to your question what accounting program you use ie., Simply Accounting?? Any equipment purchase you make for use of your company that costs 500.00 or more goes in the capital asset account.

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What Is Costs of Goods Sold

What is costs of goods sold?

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Aug 23, 2023
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Cost Of Goods Sold Explained
by: BB

The Cost of Goods Sold (COGS) refers to the direct costs associated with producing or purchasing the goods that a company sells during a specific period. These costs include direct labor, direct materials, manufacturing overhead, and other expenses directly tied to creating the product.

For retailers, the COGS includes the price paid for products that were sold during the accounting period. If a business manufactures its products, the COGS will encompass costs for raw materials, labor, and other direct production costs.

Calculating the COGS is essential for determining gross profit, which is a vital measure of a company's profitability. It appears on the income statement and is a key figure for both management decision-making and financial reporting.

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Cost of Sales

by Justine
(Easton, MD)

Hello,

We are a new company (an LLC). We are service only and will not have any inventory on hand. When we create an invoice in our accounting system we debit AR and Credit Sales. We want to show the cost of sales related to each invoice and we believe we'll have to just go into GL and create an entry. If we want to include labor and supplies purchased for cost of sales, how would we enter that in GL? My initial thought was to Debit Cost of Sales Wages and Credit wages expense (to record labor specific to that job). And then Debit Cost of Sales other and Credit Supplies expense (to record the supplies bought for that job). Would this be correct? I wasn't sure what I should do to make sure that cost of sales showed up on the income statement. Thank you!

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Aug 23, 2023
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Cost of Sales Bookkeeping
by: BB

It seems like you are trying to allocate specific labor and supply expenses directly to the jobs they relate to, allowing for a more accurate tracking of the cost of sales. Your approach is indeed correct and is a common practice in service companies where costs are directly related to individual projects or jobs.

Here's the step-by-step process that you may follow:

Debit Cost of Sales Wages: This will increase the cost of sales related to the wages for that specific job on the income statement.

Credit Wages Expense: This will decrease the general wages expense, showing that these wages are allocated directly to the cost of sales for that job.

Debit Cost of Sales Other (or Supplies): This will increase the cost of sales related to the supplies or other costs for that specific job on the income statement.

Credit Supplies Expense: This will decrease the general supplies expense, showing that these supplies were bought specifically for that job.

By creating these entries, you are essentially reclassifying expenses from general wage and supply accounts into specific cost of sales accounts. This will help in matching the revenues with the exact costs related to them, providing a more accurate representation of the profitability on a job-by-job basis.

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