Home – New Forums Money matters writing off inventory and/or meals

  • This topic is empty.
Viewing 3 posts - 1 through 3 (of 3 total)
  • Author
    Posts
  • #995692
    d3mad
    Member
    • Total posts: 73
    Up
    0
    ::

    I’m pretty sure I have it right that writing off an inventory item is not an expense, it just eats into the profit margin of the cost of the item vs how much you’ve made for the item. eg. I purchase a dozen kiddies drinks, for ease of round numbers, at 20c each. I would sell them for $1 each (again this is to make the maths easy). I paid $2.40 and potentially make $9.71 (sales-cost-gst on sales+gst credit on purchase: (12-2.4-1.2+.22=9.71).

    aside: Forgetting rent, electricity, storage et al, is my maths basically correct above?

    Inventory item: Now, if I give away a drink to a child (to any end whether to appeal to the parents, appease the child who might be playing up, or whatever. Another example of this is a free drink to someone who “checks-in” on facebook etc), to what account do I attribute that loss/cost? Do I consider it a sale at zero cents? Do I classify it as a discount on that eventual sale? I know I don’t use the usual sale price against any expense category, but how do I account for the stock item?

    Non-inventory item: Same scenario, but with regular, non inventory items such as a free entree, or loyalty meal, staff meals and the like. There’s no inventory to write off, but there’s still an overall cost. Does/should it get rung up as a zero cost sale or is it just a loss within the stock item itself (in that the profits of what the stock can make is reduced by what was given away?) How do you track meals and items that don’t form part of the inventory as a whole, but has an impact on the stock you hold?

    I’m feeling like this is a very basic question and I’m missing something :/

    #1203469
    Dave Gillen – Former FS Concierge
    Keymaster
    • Total posts: 2,566
    Up
    0
    ::

    A $0 sale sounds right to me (it registers that the item is gone and how much you earned from it), but there must be some members who handle this kind of thing routinely, so hopefully they will chime in.

    Dave

    #1203470
    Tact
    Member
    • Total posts: 71
    Up
    0
    ::

    Hi D3mad,

    Provided that you’re using a periodic inventory system (that is, you take periodic stocktakes instead of recalculating inventory after each sale in real time), then yes. It’s a $0 sale.

    Practically, how you account for it depends on your accounting/POS software and what it actually is that you’re selling.

    ~Salmin

Viewing 3 posts - 1 through 3 (of 3 total)
  • You must be logged in to reply to this topic.