Inventory Cost Method or Lower Cost Method

[jason95491]

Which method of reporting can you use if you drop shipped merchandise but also bought inventory items in bulk? I recorded the amount I paid for drop shipped items as well as the inventory purchased in bulk.

[Fern · Accepted solution]

If you recorded the actual amount you paid for both items that were drop shipped and items purchased in bulk, you used the cost method to record your inventory.

[jason95491]

I recorded the amount I paid for drop shipped items ex: if the item was $25.00 I charged the customer $50.00 = $25.00 profit. For drop shipped items I have recorded the actual amount per item (ex: $5.00 per item x 100 = $500.00 total.) Would this qualify for the cost method?

[Fern]

Yes.