[nabentre] account with inventory

[Zeeshan Khan]

The Debit inventory and Credit Cash sounds right
and so do the other entries once you sell an item.

Hope that helps
Zeeshan


On Mon, Apr 15, 2013 at 8:56 PM, Michael Baldwin <mbaldwin at gpcom.net> wrote:

> Okay, I am not a complete stranger to accounting, although it has been a
> few
> years. I did the books for a trucking company, which had nothing to do with
> inventory. Now I need to be concerned with inventory, and I am trying to
> get
> it figured out. this will be for items that I will be selling on eBay or
> other online sites.
> For buying inventory, I would debit the inventory expense account, and
> credit the checking account. But inventory is also an asset, so I need to
> debit the inventory asset account, but I am not sure what account gets
> credited to balance it out. Would I credit the same inventory expense
> account that I debited in the first journal?
>
> Example: If I buy $150 of inventory. which would primarily be children's
> clothing, so I might also be getting 100 pieces for that $150.
> debit inventory expense
> $150.00
> credit cash
> $150.00
>
> debit inventory asset
> $150.00
> credit inventory expense
> $150.00
>
> After both journal entries, the inventory expense account would have a
> balance of zero.
>
> Or is it okay to do this in one entry as
> debit inventory asset
> $150.00
> credit cash
> $150.00
>
> Then lets say I sell an item for $15 that includes $5.00 to cover shipping.
> debit cash
> $15.00
> credit sales revenue
> $10.00
>  credit shipping reimbursed expenses
> $5.00
>
> debit COGS expense (average item cost $1.50).
> $1.50
> credit inventory asset
> $1.50
>
> Well, am I close, or is my accounting much rustier than I thought, and I am
> way off on accounting for inventory.
>
> Any thoughts or suggestions are welcome.
>
> Michael
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Zeeshan Khan

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