I run a consignment shop but want to move to buy sell trade. I'm not sure how to account for trade. Any ideas? How would I apply a cost of goods for items I don't actually pay for?
Thanks for any help.

Years ago a business I was turning around had gotten involved in "trade" or barter. The owner had gotten into it without a thorough investigation and had issued script as I recall for about $60k. Whenever I tried to use trade to offset some of the costs I learned that whenever we traded we were paying for what we got at what was essentially MSRP, however they expected us to provide our product at cost...needless to say...this didn't work.

If you can trade with whoever it is you want to trade with where you're both operating on a cost basis you'll be okay, and try to keep the brokers out of it...back then they were taking 20% of the transaction which really eats into the profits.

The accounting will probably be a bit complicated...if I were doing it, say I bought a shirt for $12 that I would resell for $24. If I needed printing done and the jobs cost was normally $200. Say the printers cost is $120. I'd trade them 10 shirts for the job, and record the printing costs as an expense of $120 (a debit), and credit my inventory for the $120 cost of the shirts. While you're not making a profit on the $120 worth of shirts, you're in effect making it up on the discounted printing costs. That's the way I'd do it and then my CPA would probably catch it in review and tell me I'd screwed up and tell me how to change it.

Just be careful of getting involved with the barter groups unless there's no cost to you (beyond a nominal charge) for transactions.
Good luck
Denny

Denny

>Just be careful of getting involved with the barter groups
>unless there's no cost to you (beyond a nominal charge) for
>transactions.


That is one of the big reasons I founded my company. I noticed that barter exchanges were getting too involved in the transactions. They limited the ability for the company or individual to trade. They set monetary values and expected people to make up the difference if the trade was not an exact dollar amount.

Why? I said why don't they just let me list my product or service and not give a dollar amount? What if the other person has what I need an I have what they need and we can agree to trade without talking dollars?

Sometimes it is easier to trade a year of house cleaning for example in exchange for a year of lawn care. Or whatever..