How to Buy Coffee Supplies and
Expense Them
Tip
Expense coffee-related components to their own expense
account in order to provide an accurate net profit for coffee sales.
The accounting principle based on
determining net profit (and used on the Income and Expense Statement) is:
Sales - Cost of Goods Sold =
Gross Profit - Expenses = Net Profit
Trying to associate a cost of
goods sold value for coffee cups, lids, napkins, stirrers and other related
components on a per sale basis using the coffee PLU does not provide an accurate cost of
goods sold (and, therefore, gross profit or net profit) since different customers
use different amounts of said components. To book an
accurate net profit, record the components that are directly related to a coffee
sale PLU as an expense
to an expense account created for that specific purpose. For example, an
expense account named
"COFFEE." Then set up your coffee
sale PLUs with zero cost (and, therefore, zero cost of goods sold). This way,
when the coffee sale is recorded, the gross profit will equal the sale amount.
Then, if you record
the cups and other coffee components as an expense, your Income and Expense
Statement will show the difference between gross profit and expenses and, as a
result, give you an accurate net
profit.
When, as described above, the coffee department
sells only zero cost items, it is reported by CDB as a 100% gross profit
department. You then can compare the coffee department against the COFFEE
expense account to analyze the difference between how much you sold and how much
you spent on the same items in the date range specified—to the penny.
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