I'm just doing some books for a client and they have incurred postage fees. One lot of charges is for bringing goods in before selling them. The others are for sending out to customers. would you put them both as Cost of sales or not?
We used to journal all carriage in to cost of sales at work but now they don't bother it just goes as an expense on the P & L,.
Cost of sales includes as part of the stock all costs incurred in bringing the stock into a position suitable for sale which would include delivery charges of the stock.
I consider other postage costs such as physical invoices sent seperate to the goods to be an expense.
The overriding factor is that however charges are levied such are applied consistently and with good justification.
The Cost of Sales issue that you touch upon could really be treated seperately from the original question.
It sounds as though your company is now only interested in the Operating profit being correct meaning that the management / investor information available will be compromised and certain ratio's incorrect due to not correctly including carraige in costs into the stock cost and therefore calculation of the gross profit.
As such, your stock figure may be understated and Gross profit overstated (although Operating profit will be correct).
The above said, if the carraige costs are immaterial then its not worth making a song and dance about. (lol, you read all of the above and I finish off by saying if its immaterial don't worry about it... Bad, bad, naughty shamus).
kind regards,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I have ours as a cost of sales, mainly because the postage is incorporated into the price of the goods when sold. So for us (imo) the cost of sales is the cost of the goods to us plus what it costs us to deliver it to the customer making it a direct cost.
I may have to speak to the accountant about this as Shauns post seems to make a lot of sense and I am forever striving to create a perfect set of books :)
