3rd Party Vendor Purchases - Inventory or Service?

SSD - MI · ‎January 21, 2021

My business is a wholesaler of products. My normal inventory is easily set up in QBs products and services section. I do offer custom branded items that I subcontract out to a 3rd party vendor. Since these items are custom, I won't maintain any inventory on hand.

What is the best way to capture all of this in QB? Should the custom branded items be entered in QBs as a product or service?

What accounts does this hit in the COA? What are the journal entries for this?

The way I currently have it input, I end up with negative COGS which I know isn't correct.

Thanks,

Rustler · ‎January 22, 2021

The cost of what you special order is really not COGS, it is COS. COS, cost of sales, is a COGS type account you can create in the chart of accounts.

Create a service type item for the special order and link it to income

post the purchase using either the COS account or a non inventory item created for that purpose which links to the COS account. The only advantage of using a non inventory item for this is that you can report on the frequency to see if you might want to start stocking it.

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3rd Party Vendor Purchases - Inventory or Service?

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