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TaxRobin, Senior Advisor
Category: Finance
Satisfied Customers: 15301
Experience:  15 years of experience in financial advising with emphasis on tax issues.
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I would like to know how the debit and credits go costing

Customer Question

I would like to know how the debit and credits go for job costing i.e. If I purchase a used piece of equipment at $100.00 and my time, freight, crating, etc. to obtain and repair it is $200.00, my allotted G&A is $50.00 so I put it in inventory at $350.00 correct? So on my income statement how do I show the credit and debits. If I credit inventory for the $350.00 how do I record paying myself the $200.00 on the income statement? This is a California LLC with one owner.
Submitted: 12 months ago.
Category: Finance
Expert:  emc011075 replied 12 months ago.

Hi. My name is ***** ***** I will be happy to help you.

You cannot deduct value of your own labor. If you paid somebody else to do it you would record it as payroll or contract labor expense but if you did it yourself you cannot deduct it. You will also not increase the inventory by the value of your own labor.

As owner of a single member LLC you do not work for your LLC and you do not pay yourself. If you take money out of your LLC, you will record it as owner's draws (not deductible for tax purposes).

Customer: replied 12 months ago.
Are you getting the responces I sent your assistent who I had to answer becuase I could not respond to you due to her question locking the screen.
Expert:  emc011075 replied 12 months ago.

No, I do not see any response, just the original question.

Can you see mine?

Customer: replied 12 months ago.
For the fourth time, maybe the last two times with your assistant. I was using myself as an example, replace me with a non-owner doing the $200 worth of work . How are the debits/credits handed?
Expert:  emc011075 replied 12 months ago.

You will credit "contract labor" account.

Customer: replied 12 months ago.
you would credit the $200.00 to contract labor and what would the debit be. What about the G&A and the debit and credit to inventory. HOw do these values get added to inventory Please see my question about debits and credits, lets not get off track by me doing the labor, that only happens a small amount of the time again, I was using me as an example for doing the $200.00 worth of work.
Expert:  TaxRobin replied 12 months ago.


A general and administrative expense (G&A) refers to operation expenses rather that to expenses that can be directly related to the production of any goods or services.

If you purchase a used piece of equipment at $100.00 and labor, freight, crating, etc. to obtain and repair it is $200.00 that is the adjusted purchase price now of the equipment.

Your G & A would not be added to the cost. Those expenses ($50) are listed below cost of goods sold on a consolidated income statement.

The top line item on your statement of income is net revenues. The total cost of goods sold is deducted from this figure to determine the gross margin. The general and administrative expenses are then deducted from the gross margin in a consolidated income statement to show your net income.

You will deduct that $50) G&A on your tax return (most likely Schedule C if single member LLC).

Customer: replied 12 months ago.
Never mind, you keep going round about me doing the work. SInce I was not get an answer as to the journal enties and why I could no use the owners laber as a cost I found this on that answers the question.
That is also why I had asked for a phone call to see if talking would not help.
Expert:  TaxRobin replied 12 months ago.

New expert that posted above

I did not mention you doing the labor. I totally over looked that.

Expert:  TaxRobin replied 12 months ago.

I advised you to add that labor cost to the purchase

Customer: replied 11 months ago.
Posted by JustAnswer at customer's request) Hello. I would like to request the following Expert Service(s) from you: Live Phone Call. Let me know if you need more information, or send me the service offer(s) so we can proceed.
Expert:  TaxRobin replied 11 months ago.

Unclear what other info you require.