Price of stock when selling

Bobbington

I've registered with HMRC as a sole trader and am now reading up more on accounts. I understand that I would be taxed on income minus expenses and also understand that building up stock is not accounted as an expense for tax purposes until it is actually sold.

However some stock I buy (razor blades) goes up and down in price and rather than change my prices constantly I just enter the details into a spreadsheet which gives me an average price of what I've paid for it overall. I keep an eye on this and only increase or decrease my asking price when there is a real spike or fall overall in what I'm paying.

How would I present this when accounting a sale? If I buy 100 "Brand A" for £10 and then later buy another 100 "Brand A" for £9 I've paid an average of £9.50. If someone comes along and buys 120 of them from me would I have to account for it as 100@£10 and 20@£1.80 or could I just account for them as the average price I paid despite not having an actual receipt showing them at the average price.

I'm sure I could have explained this a lot more clearly;)

Suarez

http://www.hmrc.gov.uk/manuals/bimmanual/bim33115.htm