Cost of Goods Sold

Goods Purchased for Resale

When goods are purchased from a vendor for resale to users, the invoice prices of the items along with any costs pertaining to the procurement and receipt of the items for resale should be recorded as merchandising inventory (FAS inventory account control 1530-1559) in the general ledger (Ledger 0).

Upon the sale of an item to a user, the cost of the item and its related costs are transferred from the inventory account to the recharge operation Ledger 2 account using a cost of goods sold subaccount in the 0991-0998 range. (See Appendix F-1, Recharge Operation Merchandising Inventory Accounting Protocol, for more detailed information.)

Goods Manufactured for Resale

When goods are manufactured for resale, the invoice prices of the raw material components along with any costs pertaining to the procurement and receipt of the components should be recorded as manufacturing inventory (FAS inventory account controls 1500-1529) in the general ledger (Ledger 0).

Upon the sale of a finished item to a user, the cost of the components and any related costs are transferred from the inventory account to the recharge operation Ledger 2 account using a cost of goods sold subaccount in the 0991 through 0998 range. (See Appendix F-2, Recharge Operation Manufacturing Inventory Accounting Protocol, for more detailed information.)