Struggling with Sales and COGS
Angie015616
Member Posts: 1
I run a business with about 200 SKUs that I sell on an ecommerce site with about 100 sales a week. I make purchases in bulk and manage my inventory and COGS of each order in a spreadsheet. I've read a dozen articles and discussion threads on how to represent inventory in waveapp but am struggling to find one that works for me. Let me give a specific example below and hopefully someone can help.
I place an order for $10,000 worth of inventory that contains different quantities of 40 different SKUs. Each SKU has a different price. Over the course of the following week, I make 100 sales at different prices and end up with a deposit in my account for $6,000.
So, in my Journal, I have a $10,000 transaction in my Inventory Account (under Asset Accounts) and a $6,000 transaction in my Product Sales Account (under COGS Account). Also, In my spreadsheet at any given time, I know the wholesale and retail value of my inventory.
How do I pull this all together so the value of my inventory is represented in Waveapp?
Comments
@Angie015616,
I would recommend categorizing all purchases of products for resale to Purchases. Since you have a high volume of activity I would use a journal entry to true up the inventory balance on a regular basis. Weekly or Monthly. You debit and credit Purchases and Inventory to true up the balance of Inventory to your ledger sheet. It is the simplest way to reflect an accurate Cost of Goods sold. To demonstrate:
Let's assume Inventory on 12/12/21 was 12000 (1000 items at $4 and 1000 items at $8 each). On 12/13 I purchased 10000 ( 1000 at $4 and 750 at $8) and categorize to Purchases. During the week I sell items for 30000. My spreadsheet tells me that at the end of the week I have left, 250 at $4 left and 900 at $8 left. My ending cost in inventory is 1000 (2504) and 7200 (9008) or 8200 total. Since I started with 12000 I would debit Purchases 3800 and credit Inventory 3800. My ending numbers would be 8200 as Inventory, 30000 in Sales, 13800 in Purchases.
I believe if you create a Purchase Order in WAVE when buying the product, WAVE will categorize your products/skus as COGS, whereas when you create and invoice when selling the product WAVE will record the total invoice(minus tax) as Sales. Doing it this way, WAVE knows to subtract the Sales on the invoice from the COGS that you paid for the product on the Purchase Order, leaving you profit in your books.