Hey everyone! I started reselling on a bit larger scale this year, and plan on filing my reselling profits as self-employed income on a Schedule C.
I will use the
My question is as follows: how do I calculate inventory procurement paid for with GC bought at a discount?
Example: buy a $1000 gift card for $950
Use the GC for $1000 of good from te store
Sell at 1100.
Did I pay $950 for the goods?(cost of gc) and sell for $1100?
Or did I pay $950 for "goods"(gc) and "sell" the GC to the merchant for $1000, then purchase goods for $1000 and sell for $1100, making COGS $1950 and revenue $2100?
Or did I pay $1000 for the goods, sell for $1100 and report the discount as "other income" (line 6)
In all cases I am reporting $150 profit, I'm just not sure about the correct method
I will use the
My question is as follows: how do I calculate inventory procurement paid for with GC bought at a discount?
Example: buy a $1000 gift card for $950
Use the GC for $1000 of good from te store
Sell at 1100.
Did I pay $950 for the goods?(cost of gc) and sell for $1100?
Or did I pay $950 for "goods"(gc) and "sell" the GC to the merchant for $1000, then purchase goods for $1000 and sell for $1100, making COGS $1950 and revenue $2100?
Or did I pay $1000 for the goods, sell for $1100 and report the discount as "other income" (line 6)
In all cases I am reporting $150 profit, I'm just not sure about the correct method