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Consignments - Inventory Items with 0.00 Average Cost

I have read some of the posts on Consignments.  I do understand that Consignment Items are NOT owned by me, however I also need the ability to track their inventory within Quickbooks.  Would not the following be a viable option:

 

Company ABC is dis-continuing inventory and would like to "Consign" inventory to us to sell for them.  At the time of sale, 50% of sales price goes back to the company that gave us the goods. Is the following work flow acceptable:

 

#1 - Inventory Items created with $0 Average cost, COGS Account created for "Purchases ABC", Income Account created for "Sales ABC" Each individual item is created and tied to these accounts.

#2 - At the end of the quarter, report run showing all sales of income account "Sales ABC"

#3 - Company ABC invoices my company for 50% of the sales.

#4 - We pay the invoice and under expenses on the check select "Parts Purchases ABC"

 

Because we are using 0.00 Average cost, it shouldn't impact our inventory asset accounts?

 

We are trying to accomplish the following: Track the items and quantity (Hence why we are using inventory items), only pay for the items that are sold, when they are sold. (or quarterly).  Make sure that these items do NOT impact our books for anything other than when they are sold, and the consignment payment is made.

 

What am I missing?  We really need to be able to track the inventory of the items within quickbooks because it is integrated into our sales channels/webstores. 

 

Any insight would be appreciated.

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Re: Consignments - Inventory Items with 0.00 Average Cost


@expeditionimports wrote:

I have read some of the posts on Consignments.  I do understand that Consignment Items are NOT owned by me, however I also need the ability to track their inventory within Quickbooks.  Would not the following be a viable option:

 

Company ABC is dis-continuing inventory and would like to "Consign" inventory to us to sell for them.  At the time of sale, 50% of sales price goes back to the company that gave us the goods. Is the following work flow acceptable:

 

#1 - Inventory Items created with $0 Average cost, COGS Account created for "Purchases ABC", Income Account created for "Sales ABC" Each individual item is created and tied to these accounts.

#2 - At the end of the quarter, report run showing all sales of income account "Sales ABC"

#3 - Company ABC invoices my company for 50% of the sales.

#4 - We pay the invoice and under expenses on the check select "Parts Purchases ABC"

 

Because we are using 0.00 Average cost, it shouldn't impact our inventory asset accounts?

 

We are trying to accomplish the following: Track the items and quantity (Hence why we are using inventory items), only pay for the items that are sold, when they are sold. (or quarterly).  Make sure that these items do NOT impact our books for anything other than when they are sold, and the consignment payment is made.

 

What am I missing?  We really need to be able to track the inventory of the items within quickbooks because it is integrated into our sales channels/webstores. 

 

Any insight would be appreciated.


This will work ONLY if you are very careful.  To insure it works, the cost block on the item screen for the consigned inventory must, must be zero.  If that cost block is not zero, and there is no record of purchase for the item, a QB bug will raise its head and fake cost will be posted.  insure it is and stays zero.

 

No, the sales of the consigned items is not income at the time of sale, the items should post to a liability account named ABC or something.

 

The work flow at #3 confuses me.  You are selling the items, how is the other company to know what you sold, and the qty sold in order to bill you?  I would use that same report for sales, but then create a bill for ABC, and include a copy of that report with the check to ABC.

 

 on the expense tab of the bill...

line one, the liability account and the full amount due
line two, your consignment income account, and your share as a negative number, save and pay the bill

 

line one lowers the liability you owe them for sales

line two posts your income from the consignment sales