I run an online business, we deal in vintage and used items. Every item is sourced one by one and is unique in it’s cost price/sale price/age/and what it is. So there is no consistency with ongoing inventory ordering.
The problem I am having is that I purchase the majority of inventory from a third party website. I make random lump sum payments to this site. Sometimes$1k or 2k or 5k etc, this is essentially as a credit. Then, out of this credit, I purchase items within this website as they are available.
I then have the items packaged and they are shipped to me (generally packaged 2-15 at a time). I would then enter these items to my inventory, then sell.
The problem I have is how do I account for and enter the cost of the product without doubling up the expense of the item?
For example: If I credit this third party site with $2000, this amount of $2000 is deducted from my business bank account, which I will need to record. Should I record it by using a bill/expense?
Then (within the third party site with the $2000 credit) I buy 2 x items for $500each. If I then enter these items into my inventory later, with a cost price of $500 each, I am now doubling up the same expense. Correct?
Also I would have $1000 credit, still remaining in the third party site, not yet assigned to any inventory.
How do I record this all correctly?