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$17,000 figure is correct: 1) Store buys TV (COGS = $7K): -$7K 2) Sold TV for $10K. Realized P/L: $3K 3) $10K refunded (chargeback): -$7K 4) TV is gone as w
by brass9 14y ago
$17,000 figure is correct:
1) Store buys TV (COGS = $7K): -$7K
2) Sold TV for $10K. Realized P/L: $3K
3) $10K refunded (chargeback): -$7K
4) TV is gone as well. Inventory: -$7K
5) Potential profit loss: -$3K
Total loss: (7+7+3) = $17K
- sokoloff 14y ago1. Store buys TV. -$7000 2. Store sells TV. +$10000, subtotal: +$3000 3. Store pays chargeback. -$10000' subtotal: -$7000 You can't double count the TV, and IMO, you can't count the potential profit loss either, as that's covered once the store buys a replacement TV for inventory. There are fees on top of the above, but the store is out the COGS and fees, not double the COGS, plus the margin.