Liquor Store Inventory Control Chicago Illinois
Chris Amundson
Full Service Small & Medium Sized Business Bookkeeping, Payroll, Tax Preparation, Tax Planning & Tax Representation. and Pass Through Entity Tax Credits
Inventory is always a problem. Controlling it can be difficult if not impossible.
At face value, people always think that it should be simple.If you put a dozen cases of beer on a shelf and sell five of them, there should be seven left. Sure, in a perfect world, you would be correct. But in the real world we have to deal with inventory shrinkage, damaged inventory, and spoilage, just to name a few. Virtual inventories never work as advertised for these specific reasons.
Improper inventory numbers have more far reaching affects than one might think. Let’s say that our inventory is actually $150,000 rather than the $225,000 that we think it is. From the standpoint of accounting for income taxes your net income is too high. You would be paying far too much in federal and state income taxes.
Another question is how do you value an inventory? There are many different ways to value an inventory. Some of these methods are quite complicated such as LIFO or FIFO. The easiest and most commonly used method is the Lower of Cost or Market Method. Generally, its the lower of either what you paid for the item or what it’s worth. A perfect example would be a bottle of vodka. Between the cost of transportation and the cost of the item, the total cost is $7. But this item fell on the floor, and the bottle broke. It is now valued at zero because it has no value.
If you are having problems with your Liquor Store Inventory Control Chicago Illinois or have issues with your accounting in general, we would love to help. I enjoy hearing from my readers, and can be contacted at
Chris@AccountingSolutionsltd.com
Additional Accounting Articles and information on my firm can be found at
www.AccountingSolutionsLtd.com
Chris Amundson is the President of Accounting Solutions Ltd., a full service public accounting firm of Certified Public Accountants and Enrolled Agents handling the bookkeeping, accounting, tax preparation, and audit representation needs of Businesses, Estates, Trusts, and Upper Income Individuals.