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DEVITA
Level 1

QBO/COGS and Assembly

I recently switched from QBW desktop to QBO.

 

First of all, the transition has been a nightmare.

 

We have for the past 15 years used the Assembly of creating finished goods which are sold as a single item so that each time a product is sold each part of the finished good is subtracted from inventory. ex: A cleanser has a fill, a bottle, a pump, etc.

 

Now, with QBO is seems as though the assembly finished good does not hit the COGS with the cost of the parts.  Am I doing something wrong or is QBO not capable of hitting all of the parts to COGS account?

All assembly parts BTW live in a program called SOS Inventory.

13 Comments 13
JessT
Moderator

QBO/COGS and Assembly

Hi DEVITA,

 

Normally, the Assembly items will turn into Bundle items in QuickBooks Online. This type of item doesn't have COGS since this is just similar to Group items in QuickBooks Desktop. However, the COGS account will remain in the inventory items, so they are still reported to COGS when you record sales for them.

 

The SOS Inventory you mean, I think that's the Inventory asset account assigned to your items. You can check that out by going to the Gear icon, choosing Products and Services, and hitting Edit on one of the inventory items in a bundle.

 

inventory asset.PNG

 

By the way, the Assembly is one of the limitations in QBO. You may want to check others here.

 

We're just right here if you need additional help, so please feel free to keep on posting questions.

ethanhoh
Level 1

QBO/COGS and Assembly

Is the add expense account only available for higher tier memberships? I don't see it aval in the starter subscription 

ethanhoh
Level 1

QBO/COGS and Assembly

I don't see add expense account to a product. I only have add income account. Is this only available to higher tier subscriptions?

JasroV
QuickBooks Team

QBO/COGS and Assembly

Yes, it is, Ethan.

 

The add expense account is visible when creating an inventory item in QuickBooks Online (QBO). 

 

The inventory feature is only available in QBO Plus and Advanced. You'll want to check your account subscription and verify your QBO version. I'll show you how.

 

  1. Go to the Gear icon and select Account and settings.
  2. Click the Billing & subscription tab.

 

If you're using a lower version of QBO (Simple Start and Essentials), I recommend upgrading your plan to avail of the feature.

 

Once you've upgraded your QBO, you can use this link for reference in managing your inventories: Add inventory products in QuickBooks Online.

 

In case you're already using the Plus or Advanced plan, you'll want to ensure you've turned on the inventory tracking so you can add your inventory items.

 

Additionally, you can also import your products in QBO. This way, you can easily add them to your account. You can read through this article for the detailed steps: Import products and services into QuickBooks Online.

 

I'll be around if you need more help with your inventories and QBO account. Please don't hesitate to leave a response. I'm always here to back you up!

 

ethanhoh
Level 1

QBO/COGS and Assembly

I just started my business and currently  don’t have the funds right now for the $80 month subscription plan, great. I can only afford the simple start plan currently.
Do you have a work around for buying inventory (like calendars for example) and linking it to a sale?

Do I assign the expense to buy the calendars to an inventory asset, and every time I make a sale, make a journal entry to adjust the asset/cogs values? Just trying to figure out where QB pulls the non-inventory numbers from and can I assign the calendar purchase to that account? I hope that makes sense. I’m just trying to make this work to get my business off the ground. 

Rasa-LilaM
QuickBooks Team

QBO/COGS and Assembly

Thanks for coming back to the Community, ethanhoh.


I appreciate your letting us know that you’re using the Simple Start version. The information shared will guide us on how to resolve your inventory concern.


We’ll have to manually track the items in QuickBooks Online (QBO). This way, you can monitor the value of your inventory assets.


Let’s add the Current assets and Cost of Goods Sold accounts and link them to the items. I’ll help make sure you can do this in just a few clicks.

 

  1. Open QBO and navigate to the Accounting menu on the left panel to choose Chart of Accounts.
  2. In the Accounting screen, tap the New menu to open the Account window.
  3. Click the Account Type drop-down to select Current assets and pick Other current assets for the Detail Type.
  4. Enter a unique name in the Name field to easily identify the account.
  5. Fill in the remaining fields.
  6. Press Save and Close.

 

To set up the Cost of Goods Sold:

 

  1. Tap the Accounting menu on the left panel and select Chart of Accounts.
  2. In the Accounting screen, press the New menu to open the Account window.
  3. Pick Cost of Goods Sold from the Account Type drop-down and select the category that you wish to use in the Detail Type drop-down.
  4. In the Name field, enter the information you want to use for the account.
  5. Fill in the remaining boxes.
  6. Click Save and Close.

 

If you purchase an inventory item, use checks, bills, or expenses. Then utilize the asset account created to record its value in the Account field. The process will move the money into the asset account. Thus, increasing the value of your inventory.


When you sell the calendar, create a journal to decrease the value of your inventory. This indicates that you have less and increases your Cost of Goods Sold.


Here’s an article that provides detailed information on the account to use for the Debit and Credit columns: Can I track inventory manually in QuickBooks Online? Then proceed directly to the When you sell inventory section.


To learn more of the features included in the Simple Start version, check the following link: QBO comparison. This reference contains a link to our online tutorials. These videos will visually guide you on how to perform each task in your account.


Keep me posted if you need further assistance with managing your inventory. I’ll get back to help and get this taken care of for you.

ethanhoh
Level 1

QBO/COGS and Assembly

Thank you so much for the reply and clarification! That helps a lot. And to verify, the journal entry that decreases inventory and increases COGS is in addition to an invoice or sales receipt for the sale of that said item, correct?

ChristineJoieR
QuickBooks Team

QBO/COGS and Assembly

Thank you for your prompt response, @ethanhoh. I'd like to share some points about the journal entry in QuickBooks Online.


You got it right! When you enter a journal entry, make sure the price isn't included since it's indicated on the invoice and sales receipts.


Here's how:

 

  1. Select + New.
  2. Select Journal entry.
  3. On one line, enter a Debit to your cost of goods sold account for the original cost of the product you sold. Do not use the sales price.
  4. On the next line, enter a Credit for the inventory asset account for the original cost of the product you sold.
  5. Select Save.

 

This journal entry lowers the value of your inventory (showing that you have less) while also raising your cost of goods sold.


Also, you can contact an accountant to pull up the exact accounts to use within your books.

 

Furthermore, if you'll make changes to your adjusted inventory you can check this article for you reference.


I want to make sure everything is working well. Drop your comments below for any more clarifications.

ethanhoh
Level 1

QBO/COGS and Assembly

Everything you mentioned, worked great! Thanks for all of the help thus far. It is greatly appreciated! I have one final question that kind of ties all of the above together...


I would like to make an entry of a donation of inventory to a charity within QBO Simple Start. I was a photography vendor at an art market and donated 50% of the sales to the charity. They collected the sales and issued me a check for 50% of the total sales. Also worth noting, I have the products in an inventory asset account within QBO currently and have a transaction in my bank account linked in QBO for the income deposit for 50% of the sales. 

 

How would I go about entering this to incorporate the 50% donation, income, inventory deduction and cogs also with the 50%? I hope that makes sense.

ethanhoh
Level 1

QBO/COGS and Assembly

I hope that isn't too complicated.

ethanhoh
Level 1

QBO/COGS and Assembly

Everything you mentioned, worked great! Thanks for all of the help thus far. It is greatly appreciated! I have one final question that kind of ties all of the above together...


I would like to make an entry of a donation of inventory to a charity within QBO Simple Start. I was a photography vendor at an art market and donated 50% of the sales to the charity. They collected the sales and eventually issued me a check for 50% of the total sales. Also worth noting, I have the products in an inventory asset account within QBO currently and have a transaction in my bank account linked in QBO for the income deposit for 50% of the sales. 

 

How would I go about entering this to incorporate the 50% donation, income, inventory deduction and cogs also with the 50%? I hope that makes sense.

ethanhoh
Level 1

QBO/COGS and Assembly

Does anyone have any insight on donation question? I have found 2 ways to record through QBO simple start but they differ slightly from one another. which is correct? Please help..

 

Option 1:

Donation of products or services you usually sell

 

To record a product and services donation, you'll need to follow these steps in this order, which we'll walk you through below:

  1. Create an invoice for the products or services you donated.
  2. Create an account for charitable contributions.
  3. Create a product/service item called Charitable Contributions.
  4. Issue a credit memo to the customer.
  5. Verify the credit memo was applied to the invoice.

The following sections can help guide you through this process.

Step 1: Create an invoice

To begin to record a donation, you must create an invoice for the product or service so that you can record the income.

Don't skip this step or your balances will be off after you perform the other steps in the process.

Step 2: Create an account for charitable contributions

To create an account to use to record charitable contributions:

  1. Go to Settings ⚙.
  2. Select Chart of Accounts.
  3. Select New.
  4. In the Account dialog, select Expenses from the Account Type drop-down list.
  5. Select Charitable Contributions from the Detail Type drop-down list.
  6. Enter a Name for the account (for example, Charitable Contributions).
  7. Select Save and Close.

Once you have created this account, the next step is to create a product/service item for donations.

Step 3: Create a Charitable Contributions product/service item

To create a product/service item for charitable contributions:

  1. Go to Settings ⚙.
  2. Under Lists, select Products and services.
  3. Select New.
  4. In the Product/Service information panel, select the type of product or service.
  5. Enter a Name for the item (for example, Charitable Contributions).
  6. Select the I sell this product/service to my customers option checkbox.
  7. Select the Charitable Contributions account you created from the drop-down list in the Income account field.
  8. Select Save and Close.

Now that you have created an account and a product/service item, the next step is to issue a credit memo for the value of your donation

Step 4: Issue a credit memo

To issue a credit memo for the value of the products or services you're donating:

  1. Select + New.
  2. Under Customers, select Credit Memo.
  3. Enter or select the Customer you donated the product or service to.
  4. In the Product/Service column, select the Charitable Contributions item and enter the Amountof your donation as a positive number.
  5. In the Memo field, enter Donation or Charitable Contribution.
  6. Select Save and Close.

The credit memo reflects the amount of your donation. The next step is to verify that it has been applied to the invoice you created.

Step 5: Verify the credit memo was applied to the invoice

The final step in the process is to verify that the credit memo you created has been applied to the invoice you created for the donated items.

To verify that the credit memo has been properly applied:

  1. Select Sales, then select Customers.
  2. Select the customer you donated the product or service to from the list.
  3. On the Transaction List tab, confirm that the Invoice transaction you created at the beginning of the process has a Status of Paid.
  4. Confirm that the Credit Memo transaction you created is noted as Closed in the Status column.
  5. Confirm that a new Payment transaction is listed, with $0.00 listed in the Total column, and Closednoted in the Status column.

 

Option 2: 

To start with, we can create a sales receipt to track the inventory that you've donated. Then, create a journal entry to  associate the donations that you've made to your Charitable Donations Expense account. Here's how:
 

  1. Click the + New icon and select Sales Receipt.
  2. From the Deposit to drop-down arrow, choose your bank account. This will create a zero dollar transaction in your bank register that can be reconciled at any time.
  3. In the Product/Service section, select the product you are donating.
  4. Change the Rate of the selected product to zero, then click Save. Then, select X to close out the screen.
  5. Click again the + New icon, then select Journal Entry.
  6. In the Account section of the first line, choose the expense account used to track charitable contributions (for example, Charitable Donations Expense).
  7. Enter the cost of the product in the Debits field.
  8. On the next line, choose the Cost of Goods Sold (COGS) account for the item you donated. The cost of the product entered on the line above will populate the Credits field.
  9. Select Save and close.
Rubielyn_J
QuickBooks Team

QBO/COGS and Assembly

You can use the first option as to how to record donations in QuickBooks Online, @ethanhoh.

 

Recording a cash donation is different from recording a donation of products or services that you normally sell. To donate cash, you can record it as a check or a bill and payment. 

 

If it's the donation of products or services you usually sell, you can follow the first option. Otherwise, open this article for additional info: How to record donations or charitable contributions.

 

Additionally, check out this resource to help keep track of fund donations you receive via credit card, bank transfer, or as cash in QuickBooks Online.

 

Keep me posted if you have other questions about recording donations in QuickBooks. I'll be happy to lend a helping hand. Have a pleasant day!

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