Business Accounting Question

Mark Phillips mark at phillipsmarketing.biz
Fri Mar 11 18:31:45 EST 2011


On Fri, Mar 11, 2011 at 3:14 PM, Robert Heller <heller at deepsoft.com> wrote:

> At Fri, 11 Mar 2011 14:56:03 -0700 Mark Phillips <
> mark at phillipsmarketing.biz> wrote:
>
> >
> > Ok, but how do I handle the check I paid to the merchant for the
> sweatshirt?
> >
> > At time of purchase:
> > debit merchandise expense $15
> > credit checking $15
> >
> > At time of sale:
> > Debit checking $25
> > credit income $10
> > credit merchandise expense $15
> >
> > At the end of the day, my merchandise expense is $0, which does not seem
> > correct.
>
> Ah but it is.  Your merchandise expense was covered by the sale, with
> $10 'profit'.
>

Now I am really confused. When I buy supplies for the office, I credit
checking account and debit the supplies expense account. At the end of the
year, I can see how much I spend on supplies. Your approach says at the end
of the year, I spent $0 on team merchandise, when I actually spend $10.

Mark

>
> >
> > I would rather not get into inventory and cogs, if I can avoid it.
> >
> > What am I missing?
> >
> > Mark
> >
> > On Fri, Mar 11, 2011 at 1:46 PM, Paul Schwartz <pmjs1115 at yahoo.com>
> wrote:
> >
> > > given your suggested setup, you/I would credit the merchandise expense
> > > account for the $15, debit your checking/bank account for $25, and
> credit
> > > your income/donation account for $10.
> > >
> > > HTH
> > >
> > > Paul
> > >
> > > ------------------------------
> > > *From:* Mark Phillips <mark at phillipsmarketing.biz>
> > > *To:* Gnucash Users <gnucash-user at gnucash.org>
> > > *Sent:* Fri, March 11, 2011 12:06:24 PM
> > > *Subject:* Business Accounting Question
> > >
> > > I have a US non profit corporation that takes in donations for out two
> > > softball teams. I recently had new uniforms printed, as well as
> t-shirts
> > > and
> > > sweatshirts for parents. The uniforms belong to the club (ie are
> returned
> > > when a play leaves), so I don't allocate the cost of the uniforms
> against
> > > the individual donations from each parent. However, when I sell a
> > > sweatshirt
> > > with our club logo on it to a parent for $25, and the cost is $15, I
> have
> > > to
> > > deduct the cost of the sweatshirt from the parent's donation. I am
> having a
> > > problem thinking through the flow of transactions/accounts.
> > >
> > > Simple example: Purchase a sweatshirt for $15, sell to a parent for $25
> > >
> > > 1. Pay vendor for sweathsirt
> > > debit club merchandise expense account  $15
> > > credit checking account  $15
> > >
> > > 2. sell sweatshirt to parent
> > > credit Income/donation account for parent  $25
> > > debit some account?? for cost of sweatshirt  $15
> > >
> > > But that is as far as I can go. What account do I debit for the $15
> cost of
> > > the sweatshirt? How does that account relate to the club merchandise
> > > expense
> > > account?
> > >
> > > Thanks,
> > >
> > > Mark
> > > _______________________________________________
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> --
> Robert Heller             -- 978-544-6933 / heller at deepsoft.com
> Deepwoods Software        -- http://www.deepsoft.com/
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