cancel
Showing results for 
Search instead for 
Did you mean: 
RKN
Level 1

Vendor Prepayments / Receiving Inventory

We have a complicated inventory payment/receiving process and had some questions.  Here is our process flow:

1.  Make a 20% prepayment to vendor in China for them to begin production.  This payment will be posted to our "Vendor Prepayment" account

2.  Vendor ships from China and we owe 60% at time of landing in California.  This payment will also be posted to our "Vendor Prepayment" account

3.  Product is received (including the landed costs) and inspected at our warehouse and the balance payment of 20% is made if product passes inspection.  It is at this point that the inventory should be posted to the balance sheet.

My questions are:

1.  How do I receive all the items into inventory, with the landed costs, since we've made 80% of the payment already?

2.  What problems will I run into since the entire process does not happen in the same month.

Thanks!

8 Comments 8
qbteachmt
Level 15

Vendor Prepayments / Receiving Inventory

1. Perfect.

2 Perfect.

3. Enter the Entire gross. Put your total Prepaid on a Vendor Credit and apply it to the bill, leaving the Net due, but everything on the bill has been fully costed.

4. Pay Bills.

 

You simply need to make a custom report on the Other Current Asset Vendor Prepayment account, set it to total by Name, to manage balances properly.

Malcolm Ziman
Level 10

Vendor Prepayments / Receiving Inventory

If the terms are FOB departure port, that means the risk passes at that point and you now own the inventory. So it should be raised as inventory (in transit) when Vendor ships from China, not when you receive it

qbteachmt
Level 15

Vendor Prepayments / Receiving Inventory

Inventory is an Asset. Prepayments are an Asset. In Transit as inventory not received is an Asset. Everything here is posting as Asset. The Receipt Date is the Date in Stock. Not on some ship somewhere. Everything here is fine.

RKN
Level 1

Vendor Prepayments / Receiving Inventory

Purchase terms are delivered to our warehouse, so risk is theirs until delivery to us.  Does that change anything?

Malcolm Ziman
Level 10

Vendor Prepayments / Receiving Inventory


@qbteachmt wrote:

Inventory is an Asset. Prepayments are an Asset. In Transit as inventory not received is an Asset. Everything here is posting as Asset. The Receipt Date is the Date in Stock. Not on some ship somewhere. Everything here is fine.


 It is an inventory type asset when the risk has passed.  I suggest you do some research on the matter.

But if you want to have only one line on your balance sheets for Assets, then it doesn't matter. 

Malcolm Ziman
Level 10

Vendor Prepayments / Receiving Inventory


@RKN wrote:

Purchase terms are delivered to our warehouse, so risk is theirs until delivery to us.  Does that change anything?


If terms are to your warehouse, then you are right to raise the inventory upon receipt. 

qbteachmt
Level 15

Vendor Prepayments / Receiving Inventory

"Does that change anything?"

 

No. All this is, now, is a devolving discussion over which type of asset to track it. And since it isn't the Inventory Items themselves, it isn't in stock and it is only a Value. Asset Value is all you need to see.

ShamrockAladdin
Level 1

Vendor Prepayments / Receiving Inventory

Where is the box located to type in the location for the FOB box so it auto populates all future invoices?

Sign in for the best experience
Ask questions, get answers, and join our large community of QuickBooks users.
Sign In / Sign Up

Need to get in touch?

Contact us