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Freight

  • 35 posts
  • # 113286

If you receive goods into your company from a supplier of freight that would later be sold, these are purchase costs or 'carriage in'.  In other words I understand any invoices received from suppliers would go to a 5000 nominal as these are associated with cost of sales. If then you have other freight purchase invoices which were entered into Sage for freight charged for transporting our product to an end user e.g 'carriage out', these are costs incurred by the company but also charged out on invocies to make a profit, would this also be in a 5000 nominal such as 'carriage out'.  As I understand it, sales made that include carriage that cannot otherwise be made without the transportation cost should be included in the cost of sales calculation.  So what I am asking is would these 'carriage out' purchase invoices be entered in a 5000 nominal, whilst the carriage which is recharged to end user be recorded in the sales nominal such as distribution and carriage.  This way you can see how much of that profit on carriage you purchased is part of your total sales revenue ?  I don't want to include these freight purchase invoices in a 4000 nominal because this nominal is for carriage recorded on sales invoices that was recharged it's money coming in.  Any help would be appreciated here.

  • Fellow PM.Dip
  • Practice Licence
  • 258 posts
  • # 113288

Hello happystudent (sorry your name isn't listed anywhere!) - you are correct that carriage in costs would be in the 5000 nominal code as they are cost of sales.

For "carriage out" in my experience these charges are normally seperate from the 4000 nominal code but still within the "Revenue" range of nominal codes. But I think it really depends on reporting preferences, as long as these charges are included within the "Revenue" nominal codes then they are being included correctly.

 

Meena

  • 35 posts
  • # 113292

Thanks for reply.

Yes the carriage that is actually reported from each invoice to customer is the 4000 sales nominal like to distribution and carriage where it can be seen in the sales total in the P and L.  It is this carriage that has already been invoiced to our company though so we are paying our suppliers for transporting  goods to our customers.  It is this carriage on these bills from suppliers that is classed as carriage out that I want to know where to report.  Do you agree that this is shown in the 5000 nominal, as it is being entered as a purchase invoice.  It is a still a cost of making a sale, at which point the carriage is charged to the customer where profit can be made ?

 

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