I'm trying to calculate my Cost of Goods Sold and have a few questions.
1. My business operates on consignment (consignors give us products to sell in the shop, and we pay them once they sell), in addition to a small percentage of inventory being purchased wholesale. In order to calculate my "Beginning inventory" and "Ending inventory," do I include only the wholesale items? I've read on an IRS document to exclude "items on consignment," but have read other conflicting things.
2. Seeing as this is the first year the business is in operation, the "Beginning inventory" is nearly zero, and the "Ending inventory" much higher, resulting in a negative number for Cost of Goods Sold (there aren't that many "Purchases" required for us to get the goods). This seems to ignore a large amount of inventory we obtained throughout the year, but sold (meaning it's not in either category). Would these items obtained in the middle of the year go under "Purchases"?
All and any help is appreciated. Thanks!
