I don't think Michaels explanation is very clear, but he's right that you're not thinking of this right.
Purchasing the widget is an asset transfer, so you DR inventory and CR what ever account sources the funds. That would be Accounts Payable if you're doing accrual accounting or a bank or liability account if you're doing cash. When you book the sale you CR Expenses:COGS and DR inventory; you also CR income:sales and DR whatever account receives the payment, normally Accounts Receivable or some bank account. GnuCash is OK for this kind of activity if you don't do a lot of it and have only a very few line items, otherwise you'll want to switch to a more capable program like Odoo. Regards, John Ralls > On Jun 17, 2023, at 12:46, Michael or Penny Novack > <stepbystepf...@comcast.net> wrote: > > You are expecting the cost of goods sold at the wrong time. It is unrelated > to when the goods are obtained (added to inventory) > > To perhaps make this easier for you to see, we'll use an example from one of > "my" org as "organizations which had tee shirts, both sold to supporters AND > given to volunteers as "recognition". In other words, when we bought a batch > of tee shirts, we don't (yet) know how many will end up being sold and so > affect the expense "cost of goods sold" and how many the expense > "recognition". > > So lets say we buy another batch of 100 @ #7.20 So we debit inventory:tee > shirts:debit batch 5 $720 and credit checking $720 NOT (yet) an expense. > inventory is an asset so it's just one type of asset (money) to another (tee > shirts) > > Now we get back a report from the group who tabled at an event. They sold > seven tee shirts for $29 each. There were still four remaining from batch 4 > (@ $7.15 and three from the new batch 5 (@ $7.20). So the complete > transaction looks like this (if entering as a two way split -- you could > instead use two transactions to avoid that) > Debits > Cash $100 > Cost of goods sold $50.20 > Credits > Sales $100 > batch 4 $28.60 << note batch 4 now > cleaned out so could be hidden if desired >> > batch 5 $21.60 > <<< note -- doing inventory FIFO and on the cash basis so invoicing and > when those paid not involved ---- and you could instead have done in > multiple transactions to avoid the two way split >> > > But really Eric, this isn't a gnucash question. You aren't asking how do I > enter this but "what accounts should I be debiting or crediting?" Gnucash is > a tool that automates double entry bookkeeping and those of us who learned > doing it the old way pen and ink on paper can appreciate what it is doing for > us. But you STILL need to learn the basics of accounting/bookkeeping. If the > tutorial isn't enough for you, obtain a beginners text (paper or virtual) > > Michael F Novack > > On 6/17/2023 2:50 PM, Eric Hammond wrote: >> First, what is the proper way to reply / request to this email sequence? >> I follow the instructions at the end: >> "Please remember to CC this list on all your replies." >> "You can do this by using Reply-To-List or Reply-All." >> But only end up with "gnucash-u...@gnucassh.org" and get mildly chastised >> for not replying properly. >> >> My tax accountant needed me to supply cost of goods sold, "COGS", but I have >> not figured out how to do this >> Current sequence: >> I schedule a visit with the client, and determine the likely need for a >> widget of some type. >> I purchase it ahead, and document with a Purchase order. At some point I >> receive it and log it into Inventory. >> Original attempt: >> Item Acct Dr Cr >> ------------------------------------------------------- >> Widget Payables $10 >> Inventory $10 >> -------------------------------------------------------- >> Payment Bank $10 >> Payables $10 >> >> >> Clean, but no COGS entry. My best attempt is this: >> Item Acct Dr Cr >> ------------------------------------------------------- >> Widget Payables $10 >> COGS $10 >> -------------------------------------------------------- >> Payment Bank $10 >> Payables $10 >> >> And when I get the part from vendor: >> >> Item Acct Dr Cr >> ------------------------------------------------------- >> Widget Purchases $10 >> Inventory $10 >> >> >> I am ok with the extra step, but what kind of account is Purchases? >> Is this even proper accounting? >> Thank you! >> Eric >> >> ------------------------------ >> >> Subject: Digest Footer >> >> _______________________________________________ >> >> gnucash-user mailing list >> gnucash-user@gnucash.org >> To update your subscription preferences or to unsubscribe: >> https://lists.gnucash.org/mailman/listinfo/gnucash-user >> ----- >> Please remember to CC this list on all your replies. >> You can do this by using Reply-To-List or Reply-All. >> >> >> ------------------------------ >> >> End of gnucash-user Digest, Vol 243, Issue 24 >> ********************************************* >> _______________________________________________ >> gnucash-user mailing list >> gnucash-user@gnucash.org >> To update your subscription preferences or to unsubscribe: >> https://lists.gnucash.org/mailman/listinfo/gnucash-user >> ----- >> Please remember to CC this list on all your replies. >> You can do this by using Reply-To-List or Reply-All. > > > -- > There is no possibility of social justice on a dead planet except the > equality of the grave. > > _______________________________________________ > gnucash-user mailing list > gnucash-user@gnucash.org > To update your subscription preferences or to unsubscribe: > https://lists.gnucash.org/mailman/listinfo/gnucash-user > ----- > Please remember to CC this list on all your replies. > You can do this by using Reply-To-List or Reply-All. _______________________________________________ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user ----- Please remember to CC this list on all your replies. 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