Question

Client is a Dog Trainer

Forum|Forum|7 years ago
January 15, 2019
2 replies
11 views

I have a client that sells and trains protection dogs. When he sells a dog he sell it to the new owner around $20K. In that cost is the fee for the dog, training and equipment he purchased for the dog. He is purchasing the dog around $10k. How do I categorize this in quickbooks correctly? Will the Dog, Training and equipment go under Cost of Goods?

QuickBooks Online

Regina_Lend_A_Hand_Accounting

Level 2

Anything you need to purchase to sell a product or service is a cost of goods or services sold expense. When you setup the sales item you also enter that you purchase the item and enter the cost of the purchase and map it to a COGS account. If you purchase training or equipment for the dogs it should be setup as a product or service item and mapped to a COGS account, this way it can be entered into your expenses and/or bills and credit card charges, as well as PO's if issued. This is how you track your COGS expenses.

qbteachmt

Level 11

You seem to be using the words Fee and Cost interchangeably.

"When he sells a dog he sell it to the new owner around $20K."

That is the Gross Revenue from the sale.

"In that cost"

Nope; that is Already part of the Purchase data you would have in this file. That isn't "in" the Sale. That is going to help the reporting determine Net and Profit.

"is the fee for the dog, training and equipment he purchased for the dog."

Exactly. That is not part of the Sales Data. That is the Costing and Expenditure entries already existing.

"He is purchasing the dog around $10k. How do I categorize this in quickbooks correctly?"

You would need to work with your own CPA, because that sort of Price Point and the delay in Acquiring, training, and then Selling, means the Dog Purchase likely is WIP = Work In Progress = Other Current Asset, until Sold. This is the same thing a Builder does for Spec Homes = investing in their own Asset, until it sells. Then, the Invested Costs are "Closed" from WIP to COGS for the date the Sale Happens.

And that is why you get Profit = from that date and these separate Gross activities.

"Will the Dog, Training and equipment go under Cost of Goods?"

Once the dog Sells, but not From the sale. From the Invested Cost transactions = the Spending.

Regina_Lend_A_Hand_Accounting

Level 2

You are incorrect. I was not using Fee and Cost Interchangeably. I was speaking to how you setup Items you sell in QBO and map the Purchase "Cost" of said item to a COGS account on your Chart of Accounts. I give advice on how to use QBO as a certified ProAdvisor. You are assuming too much and you are incorrect in many of your assumptions.

When you setup an item correctly in QBO that you purchase and sell, you map the purchase of said item to a COGS account, this is how it is done, period. I was not speaking of "when" or "how" the COGS income and COGS expenses post to the P&L Report. Also, the training and equipment expense required for the sale of the dogs can absolutely be considered COGS expenses.

We don't need to make things seem more difficult or complicated than they actually are. This forum is used to answer QuickBooks specific questions, not accounting questions that CPA's frequently answer. You have the wrong idea here, and you are confusing people and giving them way too much information that is not necessarily being asked for.

This small business owner who sells training dogs does not seriously need to setup WIP for their dog training, and the dogs and equipment are assets of the business until they are sold, then they become income. The training is a COGS "type" expense because it is necessary to sell the dogs, AND this business owner did not specify that it takes a long time to sell the dogs either.

It is completely illogical to liken training and selling service dogs to building spec homes.

M

Malcolm Ziman

Level 4

Who pays $20k for a dog?!

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