Client sells alcohol. Is it proper to include Fed and state excise tax in COGS? Seems to me this is where this belongs, not under "taxes". I could be wrong and would like your opinions.
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How Collected
Dennis, each state varies on how this stuff is taxed. If he buys the "seal" when the product is purchased, it should be considered as purchase cost on Cost of Goods Sold. This would be true even if he maintains a separate account for the seals. (That might be smart if the seal is subject to state auditors)
If the tax is assessed upon the sale, it should be accounted for just like a sales tax. Should be paid, but removed from the "Net Sales" category as a negative.
It is possible for a state to have both kinds of taxes. "Sin" taxes are very popular nowadays. -
Tax
Snags,
I will ask him. Some areas of alcohol sales just are not sinking in this head of mine. My family was involved in alcohol sales when I was younger and you'd think some of it would've sunk in.
Thanks again, Snags
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