Question

How to record cost of repackaging for a trading company? The repackaging is done because the inventory was damaged and because of the repackaging, company able to sold the damaged inventory.

And also how do you record the repackaging cost in the income statement?

Answer 1

The process of packaging goods again or differently is called repackaging. This cost of repackaging is actually part of goods sold and to be recorded as follows in the income statement.

Calculating COGS - Inventory

Costs related to retail or wholesale inventory include:

• Inventory purchases, including any discounts and allowances
• Freight
• Repackaging expenses

Hence we can say that Repackaging cost will increase the cost of goods sold and reduce the profit of the company