Looking to understand how I properly account for inventory purchased on credit in a manual accounting journal... For example, I buy a piece of equipment for resale for $100,000 purchased on a floor plan and unsold by year end. My understanding is the proper journal entries would be: Inventory is increased by $100,00 and accounts payable by $100,000. This makes no changes to the income, it's purely on the balance sheet. No problem there, right?
But when I get to Turbotax Business - under Total Cost of Goods Sold it asks for Beginning Inventory, Purchases, Other Costs and Less: Ending Inventory. Now, this seems to create a problem, because that ending inventory is up $100,000 - how do I properly have a purchase entry, so it doesn't show as $100k in pure profit? Or is there something else I should be doing?
