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QualGenSer
Level 2

Payments for warranty work

Sorry, it's me again - everyone's favorite Pollock.

I have a small issue I am not sure how to handle.

Single member LLC, QuickBooks Desktop 2019.

I am trying to set up to receive payments from a manufacturer for warranty work provided. I've got it down for if no parts are used and it is just labor, or if the manufacturer provides the parts.

But I'm having an issue with me using parts from my inventory.

Here is the scenario:  I go to a job that is a warranty job. I do the work, and use a part from my inventory. My cost on the part is $100, and I have $300 in labor changing the part. It costs me $8 to send the bad part back to the manufacturer.

When I file my claim with the manufacturer (done online), they automatically calculate time and costs based on their books.

So I get a check in the mail, with an itemized Payment Memo. It breaks everything down like this:

Warranty Labor                                                                                                     $300.00

Warranty Diagnostic Time                                                                                     $37.50

Warranty Travel Allowance                                                                                    $75.00

Warranty Freight                                                                                                        $8.00

Warranty Parts                                                                                                        $100.00

Warranty Commission on Parts                                                                             $10.00

Total                                                                                                                          $530.50

 

I was going to just lump it all together in to a single, basic "Warranty" group, but think I would rather be able to track these items at the end of the year, so I am going to break it down.

The Labor, Diagnostic, and Travel are no problem. I guess I can itemize these under Labor or Service, or even Other Charges (all long as it is an income account). Is one way better than another, or does it really make a difference?

It is the other 3 that I am really confused about.

For warranty parts, when I create and Item, would it go under an Income account, or COGS?

The same with Commission - I would assume I would create an Income account named "Commission

Solved
Best answer December 02, 2019

Best Answers
Rustler
Level 15

Payments for warranty work

Income is anything related to normal business activity, other income is for things like cash back, insurance rebates, interest earned, etc

 

I would use a class structure and not split this out in the accounts
warranty
>> labor
>> freight
>> commission
>>etc
and tag the lines in the invoice or sales receipt you use for the check you receive, the manufacturer is a customer in this case

All lines would post to a sub account of income, titled income - warranty

under the lists menu>class list, you can click on the parent class and select report, it will list all sub-classes subtotaled and a final total for reporting - much easier than the P&L by class and customizing it to show the same thing

 

Just use shipping expense when you pay to ship the part back

Put the item used on the actual customer invoice at a zero sales price, that moves it out of inventory and posts cost to COGS

Since you do not say you get a new part with the check, there is nothing to create or do in terms of inventory stockage.

View solution in original post

2 Comments
Rustler
Level 15

Payments for warranty work

Income is anything related to normal business activity, other income is for things like cash back, insurance rebates, interest earned, etc

 

I would use a class structure and not split this out in the accounts
warranty
>> labor
>> freight
>> commission
>>etc
and tag the lines in the invoice or sales receipt you use for the check you receive, the manufacturer is a customer in this case

All lines would post to a sub account of income, titled income - warranty

under the lists menu>class list, you can click on the parent class and select report, it will list all sub-classes subtotaled and a final total for reporting - much easier than the P&L by class and customizing it to show the same thing

 

Just use shipping expense when you pay to ship the part back

Put the item used on the actual customer invoice at a zero sales price, that moves it out of inventory and posts cost to COGS

Since you do not say you get a new part with the check, there is nothing to create or do in terms of inventory stockage.

View solution in original post

QualGenSer
Level 2

Payments for warranty work

You are the man! Thank you, thank you, thank you!

This is exactly what I needed to know - and spelled out in a way easy enough for this old Pollock to understand.

And no, I don't get replacement parts with my payment. I buy my own stock, so when I use it, I have to reorder on my next stock purchase.

 

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