|
Posted by Paul Thomas, CPA on February 21, 2008, 2:26 pm
Please log in for more thread options
> If you have a business that rents personal tangible
> property to end user in periods less than 1 year
> how do you handle inventory. It seems that you
> would need to match the income with the cost of
> goods sold over the period of the rental contract.
You have a sale.
All associated costs (COGS) are recorded at that time.
Profit is recognized on the sale of the item(s).
Journal entries would be:
CR Sales
DR Cash
DR Account Receivable.
CR Inventory
DR COGS
You can not do installment sale accounting.
Gains are recognized when the sale is made.
You have whatever cash they pay at the time of the sale.
You have a receivable for the balance.
You collect payments on that sale.
Part of what they pay is interest.
Journal entries would be:
DR Cash
CR Account Receivable
CR Interest Income
--
Paul A. Thomas, CPA
Athens, Georgia
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
| 
Yahoo! 
Google 
Windows Live 
del.icio.us 
digg 
Netscape 
XML Sitemap