Accounting Experts come in! LIFO, FIFO, AVERAGE, CASH BASIS?! Need Advice.

benshobbies · 06-27-2012, 10:07 AM

I need a local card shop owner or an accounting expert's help. I'm computing my profit/loss statement on a weekly basis now, as I am seriously considering going full time on ebay and online card sales within the short term. I'm having problems with inventory management and costing out a box of cards.

Example. I bought a box of 2011/12 Panini Past & Present Basketball for $110.00 shipped. I spent 3 weeks selling all the cards inside the box, due to other time constraints, and I use cash accounting right now to cost out expenses and I'm running into some constrictions with it that I don't like. Here is the problem:

Week 1. Buy the box, open it, sort it. Expense = $110.00, very big loss that week.
Week 2. Sell most of the hits and inserts, Very big profit of around $80.00 as the box of Past & Present was already expensed out.
Week 3. Gain of $30.00 selling the rest of the inventory.

I broke even on the box, pretty much. However, I want to avoid expensing out the $110.00 the first week. I also don't have a set time frame in which I usually sell boxes.

LIFO and FIFO wouldn't really work, as I don't know in which order I received the cards.
Average wouldn't really work, take $110.00 and divide it into 200-300 cards and that would be a huge gain all the time, and if I do go public, a huge tax bite at the end of the year.
Cash has worked up to now, but I don't know of another alternative.

Could anyone give me pointers? Am I doing anything wrong?

mutigers77 · 07-13-2012, 10:09 AM

bumping...because I want some similar advice.

Bruvydsb · 07-13-2012, 10:29 AM

When you buy the box your would:

Debit - Inventory $110
Credit - Cash $110

Sell cards:

Debit - Cogs $xxx (cost of cards sold)
Credit - Inventory $xxx (cost of cards sold)

Debit - Cash $xxx (selling price)
Credit - Sales $xxx (selling price)

Your margin will be the mark-up (difference between the cost and selling price). You need to properly match your sales and cogs within the same month. You would never do weekly books, so monthly is fine.

06-27-2012, 10:07 AM	#1
benshobbies Inactive Account Join Date: Feb 2010 Location: Berkshire County, MA Posts: 7,547 benshobbies benshobbies	Accounting Experts come in! LIFO, FIFO, AVERAGE, CASH BASIS?! Need Advice. I need a local card shop owner or an accounting expert's help. I'm computing my profit/loss statement on a weekly basis now, as I am seriously considering going full time on ebay and online card sales within the short term. I'm having problems with inventory management and costing out a box of cards. Example. I bought a box of 2011/12 Panini Past & Present Basketball for $110.00 shipped. I spent 3 weeks selling all the cards inside the box, due to other time constraints, and I use cash accounting right now to cost out expenses and I'm running into some constrictions with it that I don't like. Here is the problem: Week 1. Buy the box, open it, sort it. Expense = $110.00, very big loss that week. Week 2. Sell most of the hits and inserts, Very big profit of around $80.00 as the box of Past & Present was already expensed out. Week 3. Gain of $30.00 selling the rest of the inventory. I broke even on the box, pretty much. However, I want to avoid expensing out the $110.00 the first week. I also don't have a set time frame in which I usually sell boxes. LIFO and FIFO wouldn't really work, as I don't know in which order I received the cards. Average wouldn't really work, take $110.00 and divide it into 200-300 cards and that would be a huge gain all the time, and if I do go public, a huge tax bite at the end of the year. Cash has worked up to now, but I don't know of another alternative. Could anyone give me pointers? Am I doing anything wrong?

07-13-2012, 10:09 AM	#2
mutigers77 Member Join Date: Jul 2011 Location: Denver Posts: 1,349	bumping...because I want some similar advice.

07-13-2012, 10:29 AM	#3
Bruvydsb Member Join Date: Jan 2011 Posts: 4,914	When you buy the box your would: Debit - Inventory $110 Credit - Cash $110 Sell cards: Debit - Cogs $xxx (cost of cards sold) Credit - Inventory $xxx (cost of cards sold) Debit - Cash $xxx (selling price) Credit - Sales $xxx (selling price) Your margin will be the mark-up (difference between the cost and selling price). You need to properly match your sales and cogs within the same month. You would never do weekly books, so monthly is fine.