Implementing COGS in GnuCash for a small business

[WayneM]

I've been through the documentation, help files, FAQs, and this list and have
gained some ideas (from a newbie accounting perspective) that COGS is doable
in GnuCash. (Indeed it seems strange that COGS isn't in the basic business
accounts that I chose on startup since so many businesses would seem to have
some sort use for COGS.) 

BTW, my prior business ran on MS Money. For this fresh start I'm thinking of
abandoning the MS Microsoft Money "Sunset" edition. I have no need to carry
over any accounts, etc.

I have set up a COGs high level account in a "sandbox" which I read about in
some other messages. I have entered just a couple amounts and will be
starting with a fresh GnuCash file. In the COGs account I would have sub
accounts that will relate to my expenses as they are reflected on the US tax
form Schedule C. I'm OK with the theory I think, it is the practice where
I'm at a loss, so I'll use an example and see if I have this right. It seems
there are a couple ways to do this and I'd appreciate other's experience.

Situation. . .A single business credit card charge contains items for both
computer hardware components and software for a custom system for a client.
I want to split hardware and software for my purposes. (Note that I have a
"reseller license" and generally do not pay tax on items for resale. Those
taxes are collected and paid to the state later.)

Option A.) So I enter the total charge and split between two sub accounts
under COGS. This would seem to pose issues (and confusion with me) with
double-entry accounting,  as I need to figure out how to 'balance' the COGs
accounts??

Option B.) I enter the charge amount under Expenses, split into the
appropriate sub accounts. Something like Software (Resale) and Hardware
(Resale). I would also have Hardware and Software sub accounts for the
business, not for resale. and as needed create a custom Tax Report for my
Schedule C that I will use when filing?

or. . .

Option C.) ?????

I don't need the ability to do an in depth financial analysis of a very
simple business. I just want some simple, clear, and proper books.

Thanks in advance. . .and I think some others with COGS questions will
benefit from your insights.

Wayne








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