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-   -   Promotion cost calculation (https://www.askmehelpdesk.com/showthread.php?t=405809)

  • Oct 14, 2009, 04:58 AM
    rivoul
    promotion cost calculation
    I have two products

    First : cost 10$

    Sales 20$



    Second : cost 15$

    Sales 25$



    If I want to sell the second product with the sales price of the first as a promotion . How can I book it on the financial statement ?



    Sales – COGS = GM – MKT = NI

    20$ - (15$-3$)= 8$ -3$= 5$



    Or



    25$-15$= 10$-5$= 5$
  • Oct 15, 2009, 01:20 AM
    morgaine300

    I don't know where you're getting your math.

    Are you saying that you want to sell the second item, but you want to sell it at $20? That's like being on sale. It cost you $15, you sold it for $20. Period.

    I'm not sure why you're changing your cost on the first choice. You can't change cost. It's $15.

    If you want to keep track of it separately, just for your own knowledge of what you "lost" on the promotion, you can always create a contra sales account. That is, record $25 as the gross sales, and then debit $5 into something like "Sales Promotional Allowance" or something. Then you know how much that all added up to. On the income statement, you would still have (net) sales of $20. (You can also just keep track of it on a piece of paper somewhere if you like.)

    In the end, you're selling it for $20 and cost is $15.

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