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I am starting up a t-shirt company and don't know where to book the cost of having sample shirts made.?

These shirt will not be sold as they are just prototypes. I didn't think I should book the costs to cost of goods sold, because they won't ever be sold. Are these expenses, or some sort of start up costs? Where should I put these expenses to pay for the fabric, cutting, dyeing of these shirts that are prototypes?

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  • Rachel
    Lv 6
    1 decade ago
    Favorite Answer

    Start-up costs should be expensed, not capitalized...and I think you are correct that they don't belong in cost of goods sold. I would put them with the selling, general & administrative expenses.

    Good luck with the business!

  • 1 decade ago

    Your best bet is to put them into an Advertising & Marketing expense category, Or you can even set up a "Samples" expense category in your Chart of Accounts

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