I think your definition is correct. But I agree with Chris, you are going to have to ball park it. The issue is really which supplies go into cost of goods sold, and which go into your standard business expenses. I think there is a decent argument to be made that something like brushes is part of your annual supply items.
Unfortunately all this feels like “how many angels can dance on the head of a pin” type argument. The cost of the actual ingredients that are attached to a painting is minimal. You could make a decent estimate that no one would argue with. If you were to expense all of that as supplies that you purchases annually, then there would be nothing left to attach as “Cost of Goods Sold” or Costs of unsold inventory. I think if expenses are accounted for under “Supplies” or ‘Cost of Goods” they have the same effect on the bottom line, just so line as you don’t have them attached to both.
If you have expensive frames attached, you might have a decent concern here. But I see from a later email, you need the info for a loan. Take your best estimate.
Liz, I didn’t sell everything I made. And I still have a lot of paint, gesso, canvas, etc. on hand to use. Doesn’t cost of goods sold apply only to the artwork that actually sold?
On Apr 3, 2020, at 8:27 AM, Liz Lockett <[log in to unmask]> wrote:
Take the cost of every supply and expense you made for the year and divide by the number of things you sold.
On Fri, Apr 3, 2020, 11:18 AM Lynette Cook <[log in to unmask]> wrote:
Britt, this article addresses inventory and keeping track of costs in a general way as part of one’s business (for tax and insurance purposes), though doesn’t directly address my questions. I must come up with a number for COGS from 2/1/19-1/31/20. Thankfully, not for any other period than this!
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