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How to account for 3 different Freight & Shipping in QuickBooks 2014 desktop?

Freight & Shipping charges occur 3 different times for a manufacturer.  Freight paid for incoming materials.  Freight cost for shipping finished goods to customers.  Freight charges invoiced to customers for their purchases.  How do I account properly for all these in QuickBooks 2014 for desktop?  Is any included in COGS?  The company does not have inventory; materials are ordered as needed for each sales order.

Best answer 05-24-2018 04:36 AM

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Re: How to account for 3 different Freight & Shipping in QuickBooks 2014 desktop?

@ChrisSinFL

 

Let's do this the easy way

 

You charge customers for shipping, that is income, create a service item called pre-paid shipping and select an income account for it to post to, I create an income account called pre-paid shipping and use that item on your invoice.

 

You pay for shipping to ship to the customer, that is an expense, it is not COGS, just pay the cost and post the expense to an expense account called something like outbound shipping expense.

 

On the P&L it is easy to look at pre-paid shipping income and compare that to outbound shipping expense to see how you are doing in that regard

 

Inbound shipping for inventory items, is part of the item cost.  On the item tab in desktop list the inventory item, the qty, and click in the total cost block and enter the total cost of the item plus a portion of the inbound shipping, when you click or tab out of the block QB will do the per item rate for you.

 

IRS Pub 538 Page 18 which says
For Merchandise purchased during the year, cost means the invoice price minus appropriate discount plus transportation or other charges incurred in acquiring the goods. You must reduce the cost of inventory by a trade (or quantity) discount.

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QuickBooks Team

Re: How to account for 3 different Freight & Shipping in QuickBooks 2014 desktop?

Good afternoon, ChrisSinFL.

 

Thank you for reaching out to the Community for help on this. I'd like to give some insight to your questions about recording freight charges in QuickBooks. Freight charges can be added when receiving a bill, and when invoicing a customer. These charges will post to the account you chose when setting up a "shipping/freight" line item. I'll show you how to create this:

  • In QuickBooks, go to Lists and then click Item List.
  • At the bottom left, click Item, and then select New (Ctrl+N).
  • In the Type box, choose Other Charge.
  • Add a name for the item (i.e. "Shipping" or "Freight").
  • In the Account field, select an account to use. This will be the account used to record these transactions.
    Note: Customers most commonly use a separate COGS account for shipping/freight. These line items will not impact the COGS accounts for the inventory items. Be sure to verify this information with your accountant, so you both are on the same page.
  • Add in any additional information you'd like, and click OK.

Now you will be able to add this to bills and invoices. You will add it to an invoice like any other line item, and you'll do the same on bills. If you have any questions about these steps, leave me a comment below.

Established Community Backer ***

Re: How to account for 3 different Freight & Shipping in QuickBooks 2014 desktop?

@ChrisSinFL

 

Let's do this the easy way

 

You charge customers for shipping, that is income, create a service item called pre-paid shipping and select an income account for it to post to, I create an income account called pre-paid shipping and use that item on your invoice.

 

You pay for shipping to ship to the customer, that is an expense, it is not COGS, just pay the cost and post the expense to an expense account called something like outbound shipping expense.

 

On the P&L it is easy to look at pre-paid shipping income and compare that to outbound shipping expense to see how you are doing in that regard

 

Inbound shipping for inventory items, is part of the item cost.  On the item tab in desktop list the inventory item, the qty, and click in the total cost block and enter the total cost of the item plus a portion of the inbound shipping, when you click or tab out of the block QB will do the per item rate for you.

 

IRS Pub 538 Page 18 which says
For Merchandise purchased during the year, cost means the invoice price minus appropriate discount plus transportation or other charges incurred in acquiring the goods. You must reduce the cost of inventory by a trade (or quantity) discount.