Imventory that is received after the bill is entered.

Thanks for posting here, Lisa.

I'll be sharing info about how inventory works QuickBooks Desktop (QBDT) when it comes to receiving the payment first before the good.

The inventory will be affected based on how you record the transactions. If you immediately record the bill and mark it as paid, QBDT will assume that there's an additional item in your inventory automatically despite having no actual physical stock.

However, if you record only the prepayment indicating that the item has not yet been received, the system will consider this an open transaction and there will be no increase in the inventory quantity.

Please know that there are two ways of entering the prepayments or deposits in the program, either by using Accounts Payable or an Asset account. It's recommended to seek advice from a qualified accounting professional to determine which option would be most suitable for your business.

For detailed instructions, feel free to read this article: Record vendor prepayments or deposits for prepaid parts or services.

Also, I'll share this article to help you understand how QuickBooks computes inventory values based on the assumption: FIFO Options in QuickBooks Desktop Enterprise.

If you want to learn which report will help you manage your inventory, check out this article: Understand inventory assets and cost of goods sold tracking.

The Community forum is always available if you have additional questions about managing your inventory goods. Take care, and have a good day.

@Lisalewisgale1 

There are a number of ways this can be handled.  IMO, the easiest is to assign Accounts Payable (A/P) to the January prepayment.  QB will require you to select the appropriate vendor when you select A/P.  That records a vendor credit that you can apply to the bill when you receive the bill in April.  Between Jan. and Apr., the prepayment sits as a reduction (debit) to A/P on your balance sheet since it's technically not an expense yet.  

Thank you for the reply.  Currently the bill is set up in say March as an expense (Inventory in Transit) and the bill is paid.  When we receive the items, say in July, they are moved to the item side of the bill, broken out individually, cost and serial numbers are added.

So I believe as the bill date (March) doesn't change, QB will think the inventory was received in March.  How can I get round this.

My boss doesn't want to change the date of the invoice or the payment, just the date the inventory actually comes in.

@Lisalewisgale1 

A couple things that stand out:

1) Unless you own CPA has instructed you otherwise, prepaid inventory is not an expense, it's an asset and should be recorded as such.

2) Going back and adding the items to the March bill doesn't make sense as that will put the items into inventory in March as you alluded to.  You want them added to inventory in July obviously.  To do that, you can either receive the items with a bill or without a bill (Vendors > Receive Items and Enter Bill or Vendors > Receive Items).  You "pay" the bill by moving the prepaid inventory asset to a vendor credit and applying it to the bill.  To do that, create a journal entry: debit A/P for that vendor and credit the prepaid inventory asset account.  That closes out the prepaid inventory asset account from March and gives you the vendor credit needed to pay the final bill from July. 

Ok, that makes sense.  If I created a PO (in March) and received the items on an item receipt in July but ticked the box - bill received therefore turning the item receipt into a bill, changed the date of bill back to March, when would QB think I received the items March or July?

@Lisalewisgale1 

Try it and see.  Not sure why would you change the bill date to March.  Sounds odd.  All you need to do is to assign prepaid inventory (no items) to the March bill or payment.  Then, move that prepaid inventory to a vendor credit (A/P) when you receive the inventory in July with a journal entry (debit A/P, credit Prepaid Inventory).  Then, receive the items on an item receipt with a bill and apply the vendor credit created by the journal entry to the bill.  That will record everything accurately.