Shipping rates

Hello there!

I'm wondering if someone could help me, I'm wondering how shipping is accounted for in a retail online store. for example and customer goes to buy a tshirt for £10 then pays £3 shipping on top of that so you receive £13 - gateway fees for example 0.50p. when the order is packages and shipped it costs you £2. how would the shipping be calculated? would this be correct or not?



Kind Regards,
Jack

Comments

  • BertieBertie West Midlands Posts: 376Registered
    Generally speaking;

    Carriage in is a COGS issue.

    Carriage out an expense.

    Now, some expenses can be either way. Take the gateway charge you've mentioned, some businesses would account for this in the trading section of the P&L, others would expense it.

    The postage issue one can be a finicky one. (Again not knowing your level of study) With VAT and marking up postage, as a stamp has no VAT until its packaged on. Same way electric to a landlord is 5% to him but 20% to you as it's been packaged on - anyway.
  • jacktarjacktar Posts: 7Registered
    > @Bertie said:
    > Generally speaking;
    >
    > Carriage in is a COGS issue.
    >
    > Carriage out an expense.
    >
    > Now, some expenses can be either way. Take the gateway charge you've mentioned, some businesses would account for this in the trading section of the P&L, others would expense it.
    >
    > The postage issue one can be a finicky one. (Again not knowing your level of study) With VAT and marking up postage, as a stamp has no VAT until its packaged on. Same way electric to a landlord is 5% to him but 20% to you as it's been packaged on - anyway.
    >
    >

    Hello, thanks for your help!

    I'm currently studying Level 2 on my bookkeeping transactions unit, very early on but I'm very enthusiastic and want to learn more and understand more things. With carriage in I would assume you mean making a purchase go supplies, inventory ect in to you. So would that mean if making a purchase of £100 for stationary for example and £10 for shipping the total cost would be £110 and they wouldn't be seperate? Just debited to purchase ledger for example.

    Where as for out what I have shown that would be correct. The total amount in sales would include the shipping rate and would then be CR out of the bank when shipping is processed?

    Am I understanding that correctly?
  • BertieBertie West Midlands Posts: 376Registered
    Carriage in being when you order an item for use in your business.

    If carriage in can be separated from the purchase price of an item it should be shown as such.

    If you buy an item for £110 and the invoice shows, QTY 1 Unit X
    Dr Purchases £110.

    If an invoice shows QTY 1 Unit X £100 plus £10 delivery.
    Dr Purchases £100
    Dr Carriage in £10

    The net effect is the same. But it is better form and provides a truer picture to separate if you can. More important to that is staying uniform to what you do, for instance, don't one month record separately then the next lump it all together - stay consistent.

    For sales.

    Sale price will include an element to cover delivery.
    So unit X £140 within the £140 is delivery.

    Before you've decided on what you will sell the item for, through costings and research, one such cost which will have been considered is delivery. Delivery will form part of the unit cost / price.

    Remember what you pay for shipping an item to a customer is an expense in the lower half of the Profit or Loss account.

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