posted on December 27, 2000 06:18:21 AM new
HI all - since there are so many smart people here, anyone want to offer advice on this issue?
One of my main strategies is to buy books very cheap, take them to a used book store to get trade credit, buy nicer books, and sell on ebay or half.com. I have set up my recordkeeping to reflect this.
Example: I buy 10 books and pay $10 [at a library sale, for example].
I take them to the store and get $30 in credit.
I "buy" 5 books marked $6 each, for a total of $30.
I sell each book for $10 [gross simplification here].
I make $60.
OK. What I record is that I paid $10 for books and eventually get paid $10 each for 6 books. I don't record that I got $30 in trade credit or paid $6 a piece for the stock I actually sold.
Should I instead be recording the $30 in trade as "income" and the $30 I "pay" in credit for the 6 books as "expense"?
posted on December 27, 2000 06:32:11 AM new
I don't sell books, but if your system looks viable to book sellers, it seems as though you just gave out your selling secrets, and probably created more competition for yourself!
posted on December 27, 2000 07:43:51 AM new
katiyana - as an accountant, do you see it as necessary to document the intermediate steps or is it "OK" to cut them out as I have been doing? The net profit is the same both ways.
posted on December 27, 2000 08:52:30 AM new
Even though it is more work, I record each step separately, to create a paper trail showing all of the pieces that occurred in a transaction. This can also be useful should, heaven forbid, an audit take place. I know that at work, there are shortcuts like you propose that we COULD do, but for audit purposes (and we are audited fully every year), we jump through all of the hoops.
Doing all of the steps would be very important if the transactions cross months, especially at the end of a "fiscal year" - for you probably Jan 1 - Dec 31 to match the IRS tax year. If you bought the $10 of books on Dec. 15, got the store credit on Dec. 27th, but got the new books and sold them in January - only the $20 profit would be included in THIS year's income - the rest would go into next year's income.
For this past year, I didn't do a good enough job in doing that, so I had to do a lot of bulk entries, combining things, etc. From January 1 forward, though, I'll be able to record each and every item through my accounting software, and put things in the proper months.
posted on December 27, 2000 09:28:08 AM new
katiyana - thank you, I appreciate your help. Also, my example was very "clean" - usually the results are a whole lot more complicated than that. Also, the store never gives me any receipts, so I will have to ask them to do so from now on. What they do is put a price sticker on a card, which I can keep, then give me a new sticker debiting any store credit I use later.
I really wonder how the store itself is reporting this business. When I "sell" the books to them they run a total on an adding machine, then give me the credit. Maybe they record that somewhere, and the same thing when they debit me. They never run any of it through the cash register.
posted on December 27, 2000 11:27:20 AM new
I used to buy/sell at a used book store as well - not for selling, but for my own reading pleasure. The manager used to keep a series of 3X5 cards in a file box near the cash register to keep track of such things. I don't know how those figured into their books, but it really SHOULD be disclosed as a form of a receivable in some manner. I imagine they probably did some sort of once a month entry to adjust the outstanding credit amount or something.
Of course, I'm an accountant who LIKES being able to see each step of progress along the way.
posted on December 27, 2000 11:52:40 AM new
Hi Keziak --
One way I found to simplify my bookkeeping was by "coding" things. Take your intermediate step...I would create an acronym for that, note the date the transaction at the bookstore took place, and include it. Just so there is a record of it, with the date, so if you have to backtrack it would be easy to find the receipt.
posted on December 27, 2000 11:59:45 AM new
I use the same kind of bookstore as Katiana-but I make it even more confusing! i buy books at garage sales for 25-50 cents, and read them. Then I take them to the bookstore, which gives me credit for half the coverprice. I use that credit to buy half priced books from them to read. Books they don't take back for some reason, I sell in lots. But I keep a record of each step as income/outlay, and it works. And I get plenty to read. (Us poor folks have to get creative!)
posted on December 27, 2000 02:04:38 PM new
Bearmom: you record all that, and still have your sanity? What about receipts, does the store give you anything like that? Aside from your credit coupon, I mean?
posted on December 27, 2000 02:07:18 PM new
Bearmom: you record all that, and still have your sanity? What about receipts, does the store give you anything like that? Aside from your credit coupon, I mean?
posted on December 27, 2000 02:07:19 PM new
Bearmom: you record all that, and still have your sanity? What about receipts, does the store give you anything like that? Aside from your credit coupon, I mean?
