Transportation cost is something you\u2019re quite probably paying on your items as you purchase them. Regardless if you\u2019re transporting them on your own, you buy the service from someone or you let your supplier to transport the goods, you\u2019re still encountering expenses related to transportation.\u00a0<\/p>\n
Such expenses are normally under most accounting frameworks included within the cost of the purchased items. It\u2019s not an item of income statement initially, but included within the cost that\u2019s accounted on the balance sheet as the entry of increase in stock is made. As the item is sold, both the cost for the item itself and the transportation expense included within the cost of the item is expensed on the income statement.<\/p>\n
To give you an example, you buy 10 units of an item A with its unit price being 100. The transportation cost for the whole bunch is 200. The total amount you pay \/ encounter as an outflow of cash is 1,200 (calculation is as follows: 10 units x 100 unit price + 200 for transportation = 1,200).<\/em>Now, as you bought 10 units, the unit cost for you, i.e. the price of one unit of an item A on your stock ledger is 120 (calculation is as follows: 1,200 \/ 10 = 120).\u00a0<\/em>What you do is take the whole amount paid \/ payable and divide it by units acquired. Your accounting entry on the balance sheet would be Db Inventory 1,200 and Cr Accounts payable 1,200.<\/p>\n As you start selling those items, you expense them with the cost price of 120. For an example, if you\u2019re selling 2 items, your entry would be Db Cost of goods sold 240 and Cr Inventory 240.<\/p>\n Also, don\u2019t forget to make sure that the selling price covers for the 120 and a bit more to cover for your other general expenses and still earn you a profit as well.<\/p>\n","protected":false},"excerpt":{"rendered":" Transportation cost is something you\u2019re quite probably paying on your items as you purchase them. Regardless if you\u2019re transporting them on your own, you buy the service from someone or you let your supplier to transport the goods, you\u2019re still encountering expenses related to transportation.\u00a0<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[31],"tags":[],"class_list":["post-4956","post","type-post","status-publish","format-standard","hentry","category-1-3-inventory"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/4956","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/comments?post=4956"}],"version-history":[{"count":1,"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/4956\/revisions"}],"predecessor-version":[{"id":4957,"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/4956\/revisions\/4957"}],"wp:attachment":[{"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/media?parent=4956"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/categories?post=4956"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/tags?post=4956"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}