Screenshot 1:
shows a sample invoice with an item selling for $50.00 with a cost of $20.00(screenshot2).
Note that the shipping charge is $12.75. The invoice is correct and only applies tax to the item sold and not the shipping charge. Also note that this invoice is proper & correct. No Issues…
Screenshot2:
this shows the Manager summary page, and specifically shipping charge of $12.75 is negative.
I created a shipping entry in chart of accounts and categorized it as an expense. It should show as a positive value, thereby correctly showing the margin.
logic is following: inventory cost is a positive integer being deducted but does not show as a negative value. Shipping should be basically treated the same, AKA a positive value that is being deducted.
The shipping charges are an income to the business so it is normal that in the P & L they are -12.75.
In your P & L expenses show as positive values as you can see from the cost of sales
Your income is 50.00 +12.75 = 62.75
Your costs are 20
It is not clear why you have classified the shipping charges charged to your customers as an expense rather than income, but …
Your profit is 62.75 - 20 = 42.75
You did not create a shipping entry categorized as an expense. You defined an account in the Expenses group. But the only entry that has been posted there is the charge you made to the customer on the sales invoice. As @Joe91 already said, that is income. And income is a negative expense.
When you pay the shipping company for the shipping expense, you should also post that to the same account, where it will offset the income and zero the balance.
Understand that charging a customer for an expense does not record the expense. It only records the income.
