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tkatzenbaer
Level 1

I'm trying to record a sale but wondering how I can record the selling costs and shipping costs that I incurred for the sale.

 
1 Comment 1
jamespaul
Moderator

I'm trying to record a sale but wondering how I can record the selling costs and shipping costs that I incurred for the sale.

Hello, tkatzenbaer.

 

I'll help you record the costs incurred during the sale and provide more details about the movement on your books. 

 

The selling costs can be regarded as Cost of Goods Sold (COGS). Normally, you'll want to include the selling costs when you create an inventory item. Here's how: 

 

  1. Go to Sales, then head over to the Products and Services tab.
  2. Click the New button.
  3. Choose Inventory
  4. Enter the name and other details for the item (including the price).
  5. Under the Cost text box, enter the cost of the item. 
  6. Once done, click Save and close. 

 

RecordCOGS1.PNG

 

When you make a sale, the costs are automatically recorded under the account where you track your COGS. Though, QuickBooks Online automatically sets the COGS account by default. 

 

RecordCOGS3.PNG

 

For the shipping costs, these can be an expense or an income depending on how you handle them. If you simply charge the customer for the shipping, we can take this as an income.

 

On the other hand, it is an expense if you pay a shipper to deliver the item. Here are the processes for both scenarios: 

 

For the income part, you'll want to create an income account then attach it to a service item. Here's how: 

 

  1. Go to Chart of Accounts, then hit the New button. 
  2. Select Income or Other Income for the Account Type.
  3. Select the appropriate Detail Type.
  4. Name the account as "Shipping cost", "Prepaid shipping" or something similar. 
  5. Once done, click Save and Close

To attach the income to a service item:

 

  1. Go to your Product and Services list again, then hit the New button.
  2. Select Service.
  3. Enter a name for the account such as "Shipping" or similar.
  4. Under the Income account drop-down menu, select the income account for the shipping.
  5. Once done, click Save and close.

 

RecordCOGS2.PNG

 

When you create an invoice or a sales receipt, simply add the service item under the PRODUCT/SERVICE Column. 

 

ExampleINV1.PNG

 

If you pay a shipper to ship an item, you'll want to simply create an expense account to track the shipping costs. Click the + New button to create an Expense, Bill, or a Check. Add the expense account under the Category section. 

 

ExampleINV2.PNG

 

You can also manually track your inventory and the costs incurred during the sale. You can check this article for a guide: Can I track inventory manually in QuickBooks Online?.

 

To get a better understanding on Cost of Good Sold, you can check this article here

 

I'd also recommend reaching out to an accountant to help you select the appropriate accounts and how to track your income properly. 

 

When you're done recording the sale, you can pull up the Profit and Loss report to see how much you've earned versus what you spent. Go to Reports, then search Profit and Loss in the search box. By default, it is set as a favorite under the Favorites section. 

 

You can also pull up a number of reports. You can check these articles for a guide

 

I'm happy to show you how to record other transactions in QuickBooks Online. Do you also have other future concerns or questions? You can include them in your reply below, and I'll get back to you. 

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