Cogs?

[ewells79]

Cost of Goods Sold???

Hello,

I broker steel. Say a customer wants $10,000 worth of steel and I can buy it wholesale for $8000, hence a $2000 profit. The customer gives me deposit of 25% and balance due on delivery of goods.

My question is this: Would i have a cost of goods sold of 10,000, expenses or 8000 for profit of $2000?

Or since I am not acutally the one fronting my own money, is my income considered "service" income of $2000, with no cost of goods sold?

Thanks

 

[Samir]

This is a common 'product sales' transaction, so that 8000 is cogs.

 

[kirby]

To Ewells
Whether you have COGS depends on whether you take title to the steel. If so then you are selling steel and have COGS. If you do not take title then you do not have COGS.
One more thing, until the steel is delivered there is no sale. The money you received is just a deposit (which is a liability account)