How to input freight as cost not as expense

Hello there,

we are a ecommerce company using We offer free-shipping in all our orders, and that is why freight is a cost for us not a expense.

How we can input freight as cost? Usually we are billed monthly. To give you a idea: in May we send 100 packages, the company send the bill to us on June 1st, and we have time to pay till June 15th.

Currently we are inputing freight as a expense.

Thank you!

expense is something on which you spend your money. in your case you are spending money on freight. so that is an expense to you. what you are doing is already correct.

Yes, but we spend money on inventory and is not a expense.

The freight is this case is a cost because affect the revenue of the

I am assuming you are referring to the freight on the purchasing not on the selling therefore the freight is part of the inventory cost and not an expense.

To show the purchase freight as a cost of the inventory use the item - Freight In

This will distribute the purchase freight across the inventory items on a pro rata basis

As he has mentioned he is sending 100 packages. Not buying. So the freight is for the packages he is selling. I guess we will need better clarity from his side regarding the question.

Ok - "we spend money on inventory and is not a expense"
That is because the value of the inventory is stored in the Balance Sheet until the inventory is sold, once sold, that inventory cost gets transferred to the Profit & Loss via the Inventory Cost expense account.

When the free shipping is paid, that becomes an Inventory selling expense so to put that into figures - the inventory item cost is 30, it is sold for 50 and the selling freight is 5, so the profit is 15 (50-30-5)