Shipping Cost Management



I am still struggling with the proper management of shipping charges. So
thanks for your patience!

I have shipping charges which I charge to my customer & I have shipping
charges which I actually incur. They are not always the same, & I expect to
make some revenue off of the shipping charged to cover the cost of boxes,
tape, time, etc... in the coming year

So in my "Cash Sale" to a customer I struggle to understand how to properly
reflect the shipping charge to the customer, and the shipping cost I incur.

For my first year, I had created a shipping "item" which only reflects
incoming revenue and is considered taxable.
In an earlier post, it was properly suggested I add and use a shipping
"account" as a "Cost of Goods Sold" but then it doesn't reflect differences
in charges -vs- cost.

In each "Cash Sale" should I create an "item" to reflect the charge to the
customer (Income) and create another line entry with an "account" with a
negative number to reflect my actual shipping cost?

If I use this method, how do I ensure the Customer Invoice properly shows
the charges, but not my cost?

Thanks again!



Chris Schatte

Hi Kevin,
Your shipping costs should be refleted on the purchase order. Costs to you
that can be tracked in a cost of goods sold account.
Your shipping charges reflect on your cash sale or invoice. Cost+markup that
you charge can be tracked in income account. Add the income account "shipping
charges" as a line item on your invoice.

Chris Schatte
OA 07 08
My spaces blog:
OA 07 08



Lance [MSFT]

To explain further,

you'll need two shipping accounts, first a cogs account where you store the
amount of shipping expense you paid, and second an income account where you
store the amount of shipping fees you passed on to your customers.

On the sales transactions, put in the shipping amount you are charging to
the customer and record that to the shipping fees income account.

Presumably, you pay for this shipping on a bill someplace, so that on the
bill put in the actual cost and record that to the shipping fees cogs account.

Periodically, compare the balances for the two accounts. If you find that
the shipping fees cogs account balance is larger than the shipping fees
income balance, then the shipping fees you are charging are too small to
fully cover your shipping costs.

Hope this helps.

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