The cost of one sale

A jar of honey that cost 112.50 is sold for 180 plus tax. The lesson follows both figures from the stock movement to the journal entry to the income statement.

1. 1.We are going to follow one jar of honey from the shelf to the profit. The list already shows an average cost of 112.50 — and where that came from is the first question, because everything after it is built on it.
2. 2.Forty jars worth 4,500, at an average cost of 112.50. The average is not a stored field: the balance keeps two integers only — the quantity and the value — and divides one by the other on every read, so no rounding error accumulates across thousands of movements.
3. 3.And here is where it came from: twenty jars for 2,100 (105 each) and then twenty for 2,400 (120 each). The average is 112.50 — neither the first price nor the last. Every movement carries its own value, which is what makes the average a fact rather than an estimate.
4. 4.Now we sell one. The sale price is 180 — a figure entirely independent of the cost, set on the item card rather than derived from it.
5. 5.The shift has been open since this morning with one sale on it. The item tile on the till shows the same balance we saw in Inventory — forty — because it is the same balance, not a copy of it.
6. 6.180 before tax, 27 of tax, 207 in total, by card. Press Complete sale and three things happen in one moment: the jar leaves stock, the money arrives, and the entry is written.
7. 7.The sale is recorded as C1-00232. We start with what it did to the shelf, because that is the effect people forget: a sale does not only add money, it also consumes an asset.
8. 8.The list shows 39 jars and a value of 4,387.50, and the average cost is still 112.50 — it did not move, because selling a unit at its own average does not change the average of what is left. And the total stock value at the top came down by exactly the same amount.
9. 9.A new row at the top of the ledger: Issue, minus one, valued at minus 112.50. This is the decisive figure in the whole lesson — the cost that left is the average at the moment it left, not the newest purchase price and not the oldest.
10. 10.And the value fell from 4,500 to 4,387.50 exactly: a difference of 112.50. What came off the shelf and what came off the value are one number, not two that nearly agree.
11. 11.That 112.50 is needed in two places: it has come off stock, and it has to appear as an expense in the books. Otherwise the revenue would stand without its cost and the profit would look bigger than it is.
12. 12.One entry, five lines, two halves. The top half is the money: bank debited 207 (bank and not cash, because it was a card), sales credited 180, and tax payable credited 27 — a liability, not income. Totals of 319.50 on each side.
13. 13.And the bottom half is the cost: cost of sales debited 112.50, inventory credited 112.50. The figure was not recomputed here — it was read back off the stock movement we just looked at, so the shelf and the ledger cannot disagree.
14. 14.And here is where they settle: the 180 inside Sales, the 112.50 inside Cost of sales. The difference is 67.50 — a 37.5% margin on this jar — and JooDax prints that percentage on no screen at all; it prints the two figures it is made of. The 27 of tax is not on this statement at all: it is on the balance sheet beside it, a liability that was never profit for a single moment.