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    qazz11's Avatar
    qazz11 Posts: 1, Reputation: 1
    New Member
    		  
    #1

    Nov 3, 2008, 11:00 PM
    Recording losses
    OK, say your purchased a product at $3 and you plan on selling it for $5 to make a $2 profit.
    The customer purchased the product and paid you with a fake $5.

    Under GAAP, do you recorded your loses as the $3 price that you purchased the product at or the $5 that you sold it as?
    hamzashakaa's Avatar
    hamzashakaa Posts: 161, Reputation: 8
    Junior Member
    		  
    #2

    Nov 4, 2008, 12:19 AM

    Yes you should record just this entry:
    Dr. Cost of goods sold 3
    Cr. Inventory 3
    If you previously recorded the sale entry you should reverse it.
    Dr. Sales 5
    Cr. Cash 5

    It is as if you sold the product for free
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