the company I work for charge postage to the customer on the sales invoices. Would this postage be part of cost of sales but then it will be negative or should it be an expense? I'm confusing myself
Example they would charge £400 for a table and we would add £50 onto the invoice as postage. The £400 goes into the Dr A/R and Cr Revenue but the £50 is on the sales invoices also should it go to the cost of sales?
The postage charged to the customer should be recorded as revenue, just like the table sale. So, for your example, both the £400 for the table and the £50 for postage would be credited to revenue, and then the total amount would be debited to A/R. The actual cost of shipping (what you pay to the carrier) would be recorded as an expense. This way, your accounts reflect the actual income and expenses accurately.
