Where Do I Enter Inventory and Do I use The Cost to Purchase or The Retail Amt

[cr81dr00]

I have a small business and I purchase creams to resell to my customers. Do I enter the purchased amount or the resell amount in Turbo Tax? Is this considered inventory or COGS? Something else?

[DaveF1006]

It depends. You generally would enter either the cost of the creams or the lower of cost or market. Please refer to this IRS link for more details about the lower of cost or market.

Under the lower of cost or market method, compare the market value of each item on hand on the inventory date with its cost and use the lower of the two as its inventory value.

This method applies to the following.

• Goods purchased and on hand.

• The basic elements of cost (direct materials, direct labor, and certain indirect costs) of goods being manufactured and finished goods on hand.

Inventory and COGS are used interchangeably. inventory technically means the amount of inventory you have on hand for resale and Cost of Goods sold is the cost of maintaining and replenishing inventory..