We need assistance with the proper accounting entries for doing a reverse inventory assembly in Quickbooks. Here is the scenario. Our company will purchase an item with the following parameters:
Item Name: PRODUCTX
Cost: $200
We do not want to sell the item as is, rather we want to break up the item into four separate items and sell those individually. The four item names and costs would look something like this:
Item 1: PRODUCTX-PART1 Cost: $50
Item 2: PRODUCTX-PART2 Cost: $50
Item 3: PRODUCTX-PART3 Cost: $50
Item 4: PRODUCTX-PART4 Cost: $50
Our question: What are the correct accounting entries to take a single product and break it out into four separate products?
Our current best approach is to do this via the inventory adjustment feature, where we basically decrease the inventory of PRODUCTX by one, and then increase the inventory of PRODUCTX-PART1, 2, 3, and 4 by one. When we do this the inventory is correct but we are not sure if this will screw up average cost or anything else.
We are not sure how to do this without using inventory adjustments because we do not have a PO or Item receipt for the individual PRODUCTX-PART’s.
Any help and advice would be greatly appreciated.
