@do1969 wrote:
We are antiques and art dealers. We buy much of our unique inventory through Ebay, so I am using the paypal app to record the outgoing transactions for inventory purchase.
To this point I have been categorizing our purchases in the "Inventory: Other Current Assets" Account, but I have just discovered the item details feature. Would I be better off ignoring the account details section altogether and inputting the items as "Non-inventory products" in the item details section?
No, non inventory items post the expense immediately, though you could select the inventory asset account you use instead of an expense account. But non inventory items do not stock a qty or cost, and since your items are unique, you would need to create a new item for each, or a generic item for that type.
My previous plan was to put everything into the "Inventory: Other Current Assets" account, so that I can view it all in the register, and then when a piece was sold I would change the account to COGS.
Good plan, but you do not change the account on the purchase, you do a journal entry to move the cost from the asset account to COGS, debit COGS, and credit asset. that keeps the expense of the sale in the current period.
I would however like to utilize the inventory feature as well (more likely the non-inventory feature as I'm not dealing with quantity) so that I can issue sales receipts and invoices with the inventory listed in product/services. I am worried that there will be duplication, and I don't particularly want to have to enter everything twice, unless that's how you have to do it.
You can set up a non inventory item, as I said earlier, with generic names (furniture, jewelry, art, etc) and when you use that item in a sale, click in the description block and enter the particulars on the invoice or sales receipt
Why can I simply not pull items from the Inventory: Other Current Assets account into the actual product inventory so that when I sell it the inventory in the assets account automatically becomes COGS.
As part of changing over to tracking inventory, you can do that to establish initial count and cost, fairly detail intensive. After that you have to enter the purchase of the inventory item itself, and with unique items it is not practical since you would need a new item for each purchase.
Your though of costs in an asset account and move item cost when sold is fine, and that method is called periodic inventory.
There are two ways to do periodic inventory, choose one and stick with it, you can not mix and match
1. (my preference) Create an asset account called purchases (or inventory or something) and post all purchases of item for resale to that account. Periodically, weekly, monthly, etc value the inventory on hand, subtract that value from the amount shown in the purchases account and do a journal entry for the answer to the subtraction
debit COGS for that value
credit purchases for that value
the cost of what was sold in other words
OR
2. Post all purchases to COGS. Periodically, but at least at the end of the year, you value the inventory on hand and do a journal entry.
debit the asset purchases account for that value
credit COGS for that value
Print the P&L
then reverse the journal entry
debit COGS for that same value
credit the asset purchases account for that value
This last journal entry, moves the value of what was on hand at the end of year back to COGS so the cost will be counted against the new year sales.
