Furniture store bookkeeping: deposits, landed cost, and floor stock done right

Customer deposits are a liability, not a sale, until the timing catches you

A special-order sofa or a custom sectional usually starts with a deposit, sometimes the full amount, weeks or months before the container it is coming in even ships. That deposit is deferred revenue — a liability on your books, not income — until the piece is delivered and the sale is actually complete. Where furniture retailers get tripped up is HST: GST/HST is generally payable on a deposit at the time you receive it, even though the revenue itself is not recognized until delivery, so your books need to track HST collected on the deposit and revenue recognized on delivery as two separate events that reconcile, not one entry trying to do both jobs at once. Many stores collect a deposit at order and the balance on delivery, commonly split evenly or weighted toward the deposit, and each portion needs its own HST timing check rather than assuming the whole invoice is taxed once, at the end.

Consumer financing promotions: the fee the customer never sees

Third-party financing programs, no-interest-for-12-months plans, deferred payment offers, and similar promotions are a normal part of moving big-ticket furniture, but they come at a cost that never appears on the customer’s contract. The financing company typically pays you less than the full sale price up front, keeping a dealer fee as their margin for carrying the promotional financing. Recording the net deposit from the finance company as the full sale overstates revenue and understates cost — the dealer fee belongs in its own expense line so you can see what each financing program actually costs you to offer, since rates vary by program and change over time. Stores running two or three financing partners at once, each with a different fee schedule and a different promotional term, need the dealer fee tracked by program, not blended into one number, or there is no way to tell which financing partner is actually the better deal.

Landed cost: what a container really costs per item

Furniture and mattresses arriving by container carry freight, duty, and tariff costs that need to be spread across everything in that shipment to get a true per-unit landed cost, not applied as a flat percentage copied from last year’s container. Tariff and duty rates on imported furniture have moved more than usual in recent years, so a landed cost model needs updating shipment by shipment, not set once and left alone. Get this wrong and your gross margin by SKU is fiction — a sofa can look profitable on the showroom price and lose money once its true cost lands. Allocating a container’s freight and duty across its contents by value, rather than splitting it evenly per box or per unit, generally produces a more accurate per-item cost, since a container mixing sofas and side tables should not carry the same freight allocation on both.

Floor-plan-style supplier terms

Large manufacturers often extend trade credit on generous terms — 60, 90, or even 120 days — that functions like floorplan financing without technically being a loan. That extended payable needs to be tracked by invoice and matched against when the container it is funding actually arrives and sells, so a store does not discover a large payment coming due before the inventory behind it has generated any cash.

Floor stock, warehouse stock, and the returns that follow big-ticket sales

A showroom floor sample is not the same asset as the identical piece sitting in the warehouse — it absorbs display wear, eventually sells at a floor-model discount, and needs its own valuation track so a markdown on the display sofa does not distort the margin on the warehouse units still selling at full price. Delivery and assembly crews add another layer: their labour is a real cost of getting a sale to a paying customer and belongs closer to cost of goods sold than to general overhead, which changes how your gross margin actually reads. Warranty claims and big-ticket returns need a clear process too — a returned mattress or a warranty replacement is a cost against that sale, not a wash that disappears into general expense. For the full monthly close this all feeds into, see our bookkeeping services page, our answer on cash versus accrual accounting for why deposit timing matters, and for how landed cost should actually be costed, our answer on inventory and cost of goods sold.