Digital Goods - Cost of Goods Sold calculation

[mdakota]

Hello,

I am a Sole-Proprietor. I resell digital goods via internet (i.e. books, music etc). My suppliers provide files for distribution and I put it on a server for sell. I pay suppliers 50% from sales for the items after the items are sold. I am confused on how to figure the expenses on Schedule C - "Cost Of Goods Sold". These items are non-inventory items and I actually do not buy the items (but accumulate the amount and pay later). I think to do the following on the Schedule C (Cost Of Goods Sold):

-----------------------------------------------
Inventory at beginning of year - 0
Purchases less cost of items withdrawn for personal use - The total amount paid to suppliers
Cost of labor - 0
Materials and supplies - 0
Other costs - 0
Inventory at end of year - 0
-----------------------------------------------

Is this way correct? Please advice. Thanks you!What is the name of your state?

 

[LdiJ]

Hello,

I am a Sole-Proprietor. I resell digital goods via internet (i.e. books, music etc). My suppliers provide files for distribution and I put it on a server for sell. I pay suppliers 50% from sales for the items after the items are sold. I am confused on how to figure the expenses on Schedule C - "Cost Of Goods Sold". These items are non-inventory items and I actually do not buy the items (but accumulate the amount and pay later). I think to do the following on the Schedule C (Cost Of Goods Sold):

-----------------------------------------------
Inventory at beginning of year - 0
Purchases less cost of items withdrawn for personal use - The total amount paid to suppliers
Cost of labor - 0
Materials and supplies - 0
Other costs - 0
Inventory at end of year - 0
-----------------------------------------------

Is this way correct? Please advice. Thanks you!What is the name of your state?

You did that exactly right.

 

[mdakota]

Thank you LdiJ for your reply very much!!!!!! It helps me!!!

Just one additional question. Because of these items are non-inventory items I am also confused on the line "Method(s) used to value closing inventory". Should I check "Cost", "Lower of cost or market" or "Other". Can I leave it blank?

Again, thank you ;-)