classification of an inventory item

Forum|Forum|3 years ago
August 25, 2022
5 replies
8 views

We provide a treatment service to patients. The revenue is recorded as a service, but a physical card key is required to activate the machinery used in the treatment. How can this be classified so that the card inventory is relieved when the sale is recorded?

QuickBooks Enterprise Suite

Rainflurry

Level 11

@Libbpatt

Am I understanding correctly that these cards are prepaid and the balance is reduced as they use the machinery? Does the patient pay to load the card?

If that's the case, when the card is loaded, treat that amount as a liability because you have the patient's money but you owe them the service. Then, when the card is used, you will debit (reduce) the liability and credit (increase) income/sales.

LibbpattAuthor

No. Payments aren't processed with the card; it's only use is to activate the machinery, and it's a one-use item. What I want to know is what inventory type should the card be listed as so that inventory will be relieved when the sale is recorded. Should it be an inventory part, or will it work with a service type?

VaTT

Are you paying for the cards, or are they a "no-cost-to-you" item? My assumption is that you do purchase them, so you have an expense and increase in physical inventory. When you sell the service, you are "including" the card as a "no-cost-to-customer" part - correct? I would stock it in as an inventory part. At time you sell the service include the card as a line item on the invoice at time of sale as a zero price to customer.

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