S Corp sale of inventory how to record

Forum|Forum|5 years ago
March 13, 2021
2 replies
23 views

S-Corp sold all of their inventory for the value listed in the balance sheet. The sale was recorded as a debit to cash and credit to Current Assets-Inventory to zero out the balance sheet - there was no gain and no entry on the P&L. However, when I input into Turbo tax the beginning inventory and then $0 for the ending inventory, it adjusts my profit/loss number on my P&L. Should the sale of the inventory flow through my P&L?

Any help will be much appreciated.

Rick19744

Level 13

Yes. The other side of the entry is Dr. CGS and Cr. Sales / Revenue.

TT isn't an integrated software system for the entire business cycle, so you only adjusted the balance sheet and running it through CGS, which is necessary, is the income statement effect.

*A reminder that posts in a forum such as this do not constitute tax advice.Also keep in mind the date of replies, as tax law changes.

sjh8Author

Level 2

Okay that makes sense; however, is the cr. sales/revenue to Ordinary Income or to Other Income since the sale was not related to sales to customers but to an individual purchasing the business?