How to show items I am flipping, especially in different months?

For example, lets say I spend $10 at a garage sale on a widget on 1/30/20. On 2/3/20, I sell it for $25 for a $15 profit. I get how I can split the sale to where the basis is going back to the flipping category and the rest is budgeted, but I become confused at this point.

1 - If it is in different months, do I budget money on that purchase in January?

2 - In my reports, it will show up under my expenses for the month, quarter, year, etc. and I feel like that skews the data, as I am not 100% what my average yearly expenses actually end up being if I do this 10, 20, 50 times a year.

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  • Hi Green Filly !

    I wouldn't categorize the income back to the Widget category. That inflow isn't a refund, I'd consider it as earned income and keep the spending and earnings separate. This way, you can categorize all purchases to your "Widget" category and total all your spending. At the same time, the income you earn will be categorized as Inflow: To Be Budgeted (maybe with a "Flipped" Payee), so you can keep track of your income specifically from flipping items. If you compare the spending from your Widget category to the income under your Flipped payee, you'll be able to see your net income.

    To answer your questions:

    1 - Yes, budget for the initial purchase in January.

    2 - I think it's best not to categorize your income to the same category so that you'll have a running total of your spending(/investments). 

    Let me know if you still have questions! :)

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  • Faness described the income/expense viewpoint, so I'll describe the reimbursement approach. This is what you were originally looking for, as it seems you view your net expenses to be $0 (after flipped). It's a bit more direct, as it automatically does any "feasibility" analysis you would normally do and reports show net income.

    It takes money to make money, so budget for that upfront in a Flipping category. Make a note of what you put in -- your "seed capital" -- in the category name for reference. Make this a nice round number for convenience, say $100.

    Recognize that your temporary expense is the difference between that seed amount and the current Available. After your $10 purchase, the Available will read $90. Next month, it still reads $90, and you are still "owed" the difference from $100 or $10.

    The fundamental difference in approaches occurs when you sell an item. Categorize the inflow split between the Flipping shortage ($10) and Inflow:To Be Budgeted for the remainder (if any). Use a consistent Payee of "Flipping" to get this summarized in the Income section of reports.

    A subtlety: if you buy another $10 item before unloading the first, your shortage would be $20 (Flipping Available is $80). When you sell the first item, I suggest you categorize $20 to Flipping (to get you square), rather than $10. In other words, don't bother worrying about the basis for any particular item sold. Just deal with the accumulated shortage. (Some inflows may be completely consumed in reducing the shortage, depending on how many items you have outstanding at once.)

    If you have to add to the seed capital, just increment that value in the category name accordingly.

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      • dakinemaui
      • dakinemaui
      • 9 days ago
      • Reported - view
      dakinemaui  said:
      Categorize the inflow split between the Flipping shortage ($10) and Inflow:To Be Budgeted for the remainder

      There is a slight variant on this that is helpful if you tend to have multiple inflow transactions. Instead, record all inflows categorized entirely as Flipping (not a split). If the Available exceeds the seed amount after the batch of inflows are entered, just make a single split transaction to shift the total excess to TBB. Do not shift these funds with a budget entry, as that will mess up your reporting.

      For example, if Flipping Available is $90, your $25 inflow categorized entirely to Flipping will take it to $115. The math is a little easier then to enter another split:

      • Net (top line): $0
      • Split 1: Outflow $15 categorized as Flipping
      • Split 2: Inflow $15 categorized as Inflow: To Be Budgeted
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    • dakinemaui Faness It seems like I am getting conflicting answers here.  Faness says not to put the inflow back into the flipping category but dakinemaui says to.  Sorry - I am just really struggling with this topic, especially since I cant watch an example of it

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      • dakinemaui
      • dakinemaui
      • 7 days ago
      • Reported - view

      Green Filly It just depends on what you want to see: net income (my suggestion) or gross income (Faness). Neither is wrong, just different.

      Make a test budget, and record some representative transactions using both approaches to see which you prefer.

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