How was that -500 calculated ? Why my profit went from $400 to $1300 which doesn’t make sense because I spent $1000 more on that Purchase Receipt which was the Shipping Cost.
Hi,
I did some investigation on your issue, below my feedback, as a conclusion remaining stock onhand 92 should get the 1000$ extra cost only, what you say?
The profit seems to increase from $400 to $1300 because you haven’t entered any outgoing expense for Shipping Cost yet. You’ll notice that the value against Expenses Included in Valuation is negative. This will need to be adjusted somewhere.
Suppose you make another Purchase Invoice to another Supplier for the Shipping Cost for $1000. The “purchase” of this service might go against Freight and Forwarding Charges. After this transaction the following values will get cancelled out -
Expenses Included in Valuation $-1000
Freight and Forwarding Charges $1000
Total expense will be $500. Which should give you a Profit for the year of $300. A decrease from the one before the LCV, which is understandable because the valuation rate of the items just increased.
Referring to the screencap, the Jan column is similar to what you have and the Feb column is after the Shipping Cost expense is registered.
That being said, I think the Cost of Goods Sold amount should be $480. Reasoning -
Before LCV
valuation rate: $50
cogs: $50 x 8 = $400
With the LCV, the $1000 is considered as additional value of the items.
After LCV
valuation rate: $60 (because original total value of all items $5000 + $1000 = $6000, so the valuation_rate becomes $6000 / 100)
cogs: $60 x 8 = $480
