Cost Accounting Question

Cougar1978

You buy a coin for $100 from online auc house. This is the only item you bought at the auction. The buyers fee is 12.5 pct. Shipping is $6. It is the only item purchased on the order. You plan to price it cost plus or based on a MV basis that could be CF, CPG, or an EBay seller. It will have a sticker on back with cost and sell code.

A. You record $112.50 to inventory cost, $6.00 to shipping expense.

B. You record $100.00 to inventory cost, $12.50 to fees expense, $6.00 to shipping expense.

C. You record $118.50 to inventory cost.

What is your practice / preference? The matching principle requires matching expense and revenue in period incurred.

gtstang

I don't know what you're talking about, but if you are asking about reselling immediately after winning the auction, then you would likely need to price it at minimum $150. You could take a date to Hardee's and get each of you a combo meal deal with the profit made.

1madman

C

Bochiman

Full cost.
If I buy multiple things, I split the shipping cost equally.

ctf_error_coins

C

jkrk

@Cougar1978 said:
You buy a coin for $100 from online auc house. This is the only item you bought at the auction. The buyers fee is 12.5 pct. Shipping is $6. It is the only item purchased on the order. You plan to price it cost plus or based on a MV basis that could be CF, CPG, or an EBay seller. It will have a sticker on back with cost and sell code.

A. You record $112.50 to inventory cost, $6.00 to shipping expense.

B. You record $100.00 to inventory cost, $12.50 to fees expense, $6.00 to shipping expense.

C. You record $118.50 to inventory cost.

What is your practice / preference? The matching principle requires matching expense and revenue in period incurred.

If I understand your question?? .... When we offer the coin for resale we price the coin at whatever FMV is (a range). We don't record any expense until the coin has been sold. I the meantime we inventory the coin at 118.50 cost.

Cameonut

I use C. If I buy multiple items, I allocate the shipping cost by value.

vplite99

I agree with C. My basis in an item is the total cost, including commission and shipping fees.

JW77

As a matter of practice , shipping/freight-in is included in inventory cost and a component of "Cost of Sales" when sold. Freight-out/shipping expense to customers is considered an Operating Expense. How do I know this?---I slept at a Holiday Inn Express last night.

Bolo

Wait...people sell their coins and don't hoard them forever?

No one told me this.

jacrispies

C. - I record it as a single value with all of the costs, item, shipping, and fees, all into a single number. There is no worth to me to split up costs.

U1chicago

C

Cougar1978

Yes the cost assigned to the coin is matched with its sale price at time of sale.

I agree with answer C which is my current practice.

Dave99B

C for me (total cost).

Dave

ricko

C plus, plus.... I keep coins for a long time.. so always sell for more than total acquisition expenditure. If I were a dealer, and turning inventory quickly, then it would be C plus at least 10%, likely 20%. Cheers, RickO

Cougar1978

Yes 10-20 pct cost plus good play call, easy execution, doing the math lol. If they try counter on that just tell them “that’s the lowest the consignor will go.”