Hi Guys,
It's been a while, I'm doing fine. My shop is also doing fine, still slowly growing and I'm in the middle of re-branding. I need some help trying to figure out a simple way to track the value of my inventory. When I google for how to do that, I just find the typical accounting 101 lessons that talk about FIFO, LIFO and all that. I understand that stuff, but right now my business is so small that I want just a very simple approach. The reason I'm having difficulty is that I can't yet afford the version of QB Online that handles inventory (two versions higher than what I can currently afford, grrr), so I have to do it in Excel, manually. The good news is that I think I know where my method is broken.
Currently I'm using this formula:
ending inventory value from the last time I measured it (say, end of last month)
+
dollar value of wholesale purchases since last measurement
-
dollar value of merchandise donations made since last measurement
-
sales made since last measurement
The first (and maybe the only but it's a big one) problem is that the wholesale purchases are (duh) wholesale, but the donations and sales are retail. So clearly I need to keep track of both wholesale and retail prices of everything? And then only use the wholesale price throughout the formula?
What else? Some details to know: I don't have any consumable or perishable merchandise. I know I probably should include depreciation, but let's not do that for now (until I'm bigger). The average wholesale cost per item is $30, so depreciation isn't going to kill me yet.
