Merchandising Business Accounting

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Merchandising business is a type of business where particular companies or entities purchase inventory from other companies and resell it to get profit. Stores that you see in every cities fall to this category. You can categorize them as distributor, agents or resellers, depends on their company or inventory size. This Accounting for Merchandising Business spreadsheet is a tool to help you record and summarize your trading/retail transactions in Microsoft Excel.

Accounting for Merchandising Business

Cost of Goods Sold (CoGS) is a key term that differentiate this type business with other models. You won't meet this term in Service companies. You will get this term in Manufacturing companies, but it doesn't come from purchasing from other companies. It come from the combination of raw material cost and factory overhead. Then, you put profit on top of this cost to cover all of your expenses.

In general, companies who bought it from manufacturing companies and in bulk quantity get the best price where they can put proper margin to sell it to other companies. For example, Apple manufactures iPhone and iPad. Your company bought them in large quantity and then sell it through your own stores and resellers. Many companies fall to this category, because it is easy to buy and sell things. They don't have to think about developing their own products. They just think about how to distribute and sell them as many as possible to get maximum profit.

In internet era nowadays, opening a new store is very easy. You can put your products in E-commerce portal like Amazon, Ebay and get profit without having physical stores. But, is it profitable to cover your expenses? That's why you may need accounting tool to analyze your financial situation. Many of store owners usually don't aware about this calculation and they are calculating their profits based on cash flow. They are just calculating how much money left in their hands by the end of particular month to purchase more salable products but they forgot about other components that should be paid or already paid which cause them couldn't buy enough item for their stores.

This Accounting for Merchandising Business spreadsheet is one of a tool you can use to summarize your trading and retail businesses. It should suit you who already use Microsoft Excel as your accounting tool and want to have automatic formulas to generate particular financial reports. It requires basic accounting knowledge, though. Remember that journals in this spreadsheet require double-entry bookkeeping method where you need to pair any transactions in debit/credit columns to make it balance.

There are main parts in this spreadsheet where you will work frequently to record your transaction.

Accounting for Merchandising Business - Chart of Accounts Setup

This is an initial page where you can put your company identity and chart of accounts that you use in your company frequently. Chart of Accounts codes will be used as main references in all worksheets inside this spreadsheet. Different type of business could have different Chart of Accounts codes format.

Accounting Journals

There are general journal and special journals where you can log your financial transactions. Special journals consist of cash, sales and purchase journals. You might find different journal classification in some accounting software but you don't have to worry about it. It is just a method to log the transaction to into journals. Sometimes you will find merchandising companies have more than three special journals, for example, separating cash journals into cash-in and cash-out journals. Also, there are companies that only write all of their transaction in one general journal only.

Accounting for Merchandising - Journals

In this Accounting for Merchandising Business spreadsheet, you can classify and write all of your transaction as follows :

  • General Journal : All non cash transaction that are not parts of Sales and Purchasing transaction
  • Cash Journal : All cash transaction including sales and purchasing transaction
  • Sales Journal : All sales transaction excluding cash transaction
  • Purchase Journal : All purchase transaction excluding cash transaction

Adjusting Journal : All internal adjustment or non cash value transaction like depreciation values or rental payment adjustment (your company paid rental for one year but in report you need to specify it monthly).

Remember, you must fill all transactions in journal with double-entry bookkeeping method.

Financial Report

There are four main financial report you can generate from journals. It is as easy as selecting respective chart of account codes in each report format worksheet. Then, you will get them printed in report worksheet with formal layout.

  • Profit and Loss Report : To show your company profit and loss situation. You can see them in month visualization as you can see in screenshot below.
  • Balance Sheet : To show your company financial health condition. You can monitor them in month display as well and analyze whether your assets tend to increase or decrease over months.
  • Cash Flow Report : This one to show you your company cash flow situation. This is the easiest parameter to see since you can see them physically.
  • Equity Report : To show your investors or yourself status of your investment

Accounting for Merchandising Business - Pnl Format and Report

Before you use this spreadsheet, there are separate modules you can download to check whether this Accounting for Merchandising Business spreadsheet fits your needs. If you provide services more than selling your products, you can learn about Accounting for Service Business spreadsheet.

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