Business Accounting Question

[Mark Phillips]

On Fri, Mar 11, 2011 at 4:31 PM, Mark Phillips
<mark at phillipsmarketing.biz>wrote:

>
>
> 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.
>
> One thought....

1. pay vendor for merchandise

Credit checking account $15
debit asset merchandise $15

2. Sell sweatshirt

Debit cash $25
Credit Income/donation $25
Credit asset merchandise $15
debit income/donation $15

This leaves a net $10 in the income/donation account, and $0 in the asset
merchandise account.

Mark

> 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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