Hi David and David :-) Thanks for your replies. I'm not running any business at all. I am a musician who also collects (vintage) music instruments. As I also do play them, it happens a couple of times a year that I'm not interested anymore in keeping one or the other instrument. For this reason, I sell a couple of items a year and given the fact that the majority of my items are "vintage" ones, prices are always fluctuating. So I want to keep track of how much I've gained (or lost) when selling an item. Given the above, I think that if I would only use a single "Music equipment" account, I could not see how much I made (plus or minus) while selling some items - right? This is the reason which led me to think about setting up some accounts to "correctly" keep track of this all.
Using this: 1. Debit the Checking account for the total amount of the purchase paid by the customer; 2. Credit the Income:Sales account by the total amount of the purchase; 3. Credit the Inventory: MusicEquipment Sales account by the amount of the cost of the items sold; 4. Debit the Expenses:Cost of Goods Sold account by the amount of the cost of the items sold. I would do the following when selling something for 120 which I bought for 100: 1. increase the checking account by 120; 2. increase the "Income:Sales" account by 120; 3. increase the "Inventory:Music Equipment Sales" account by 120; 4. decrease the "Expenses:Cost of Goods Sold" account by 100. (of course previoulsy I'd had increased the "Inventory:Music Equipment Purchases" and decreased my "Assets:Checking Account" by 100). Am I correct with the above? TIA, F. https://www.instagram.com/boniforti_music https://soundcloud.com/boniforti_music https://bonny-j.bandcamp.com Am Do., 19. Sept. 2024 um 03:52 Uhr schrieb David Cousens < davidcousen...@gmail.com>: > Flavio, > > Why would you need a Music equipment sold account in the first place? > > If your business is making music then: > > when you buy equipment you credit your checking account and debit the > Music Equipment asset account by the amount of the purchase; > when you sell the equipment you debit your checking account and credit > the music equipment account. > > In this case the equipment is not held for the purpose of selling it at > a profit. You may however be subject to capital gains type taxes if > they apply in your jurisdiction and the value of the equipment sold > exceeds the thresholds for such taxes. > > The situation may however be slightly different if your business is > actually retailing music equipment. In this case the Music Equipment > account is essentially an Inventory account - still an asset account. > > You would normally in these circumstances set up an Inventory asset > account which is a placeholder with two sub accounts Inventory:Music > Equipment Purchases and Inventory:Music Equipment Sales. Your Income > top level account will also need a subaccount Income:Sales and your > Expenses top level acoount will need a sub account Expenses:Cost of > Goods Sold (GoGS) > > The basic procedure is the same for purchases of equipment, credit the > checking account and debit the Music Equipment Purchases sub account. > > When you make a sale only the difference between the cost of the > equipment sold and the selling price is your income ( neglecting any > sales tax issues which may also apply) so the following will be the > basic procedure: > > Debit the Checking account for the total amount of the purchase paid by > the customer; > Credit the Income:Sales account by the total amount of the purchase; > Credit the Inventory: MusicEquipment Sales account by the amount of the > cost of the items sold; > Debit the Expenses:Cost of Goods Sold account by the amount of the > cosdt of the items sold. > > Your profit on the transaction is recorde by the difference between the > Income:Sales account and the Expenses:Cost of Goods Sold account > entries. > > Dealing with any applicable taxes will add additional steps to the > accounting as will making allowances returns of purchases to > suppliersof faulty equipment and returns of equipment to you with > faults by customers. You should consult an accountant and consumer > legislation in your jurisdiction in how to deal with these. > > David Cousens > > On Wed, 2024-09-18 at 23:37 +0200, Boniforti Flavio wrote: > > Hi. > > Still very noob here, so bear with me please. > > > > I've got the following accounts (among others): > > > > Music equipment > > Music equipment sold > > Checking account > > > > When I buy music equipment, I take the money from my checking account > > and > > add it to the "music equipment" account. > > When I sell music equipment, how should I register it? I thought that > > the > > account "music equipment" would decrease by the sold value, the > > checking > > account would increase by the same amount... but what happens with > > the > > "Music equipment sold" account? > > Or am I wrong in separating "music equipment" from "music equipment > > sold"? > > > > Thanks, > > F. > > > > https://www.instagram.com/boniforti_music > > https://soundcloud.com/boniforti_music > > https://bonny-j.bandcamp.com > > _______________________________________________ > > 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. > 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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