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?

Comments for Cost Of Goods Sold Bookkeeping Question

Average Rating starstarstarstar

Click here to add your own comments

Apr 08, 2011
Rating
starstarstarstar 		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.

Click here to add your own comments

Join in and write your own page! It's easy to do. How? Simply click here to return to Bookkeeping Questions and Answers.

Cost of Goods Sold

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

Comments for Cost of Goods Sold

Average Rating starstarstarstarstar

Click here to add your own comments

Oct 29, 2012
Rating
starstarstarstarstar 		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.

Click here to add your own comments

Join in and write your own page! It's easy to do. How? Simply click here to return to Bookkeeping Questions and Answers.

What Is Costs of Goods Sold

What is costs of goods sold?

Comments for What Is Costs of Goods Sold

Average Rating starstarstarstarstar

Click here to add your own comments

Aug 23, 2023
Rating
starstarstarstarstar 		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.

Click here to add your own comments

Join in and write your own page! It's easy to do. How? Simply click here to return to Bookkeeping Questions and Answers.

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!

Comments for Cost of Sales

Average Rating starstarstarstarstar

Click here to add your own comments

Aug 23, 2023
Rating
starstarstarstarstar 		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.

Click here to add your own comments

Join in and write your own page! It's easy to do. How? Simply click here to return to Bookkeeping Questions and Answers.


Please subscribe to my monthly newsletter, Bookkeeping Basics E-zine. It tells you every month about the new information that I have added, including some great tips and advice from myself and other Bookkeeping Basics readers.

Enter Your E-mail Address
Enter Your First Name (optional)
Then

Don't worry — your e-mail address is totally secure.
I promise to use it only to send you Bookkeeping Basics E-Zine.

Like Bookkeeping-Basics.net?