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SignEnhancers
Level 1

Acquired assets of an established corp, and created a new corp to house them. The former owner is carrying the note on the acquisition. How do I record inventory assets?

In entering inventory starting values I assigned them to the long-term liability acct for the note payable. I run on cash basis. Problem I'm finding is that QBO can't run a hybrid approach with accrual basis on inventory only. Therefore my inventory sold is never expensed to COGS (it shows correct on accrual reports, not cash). Inventory values are adjusting accurately, so I don't see how to do a dbl entry to adjust COGS without throwing off my inventory. Can I do some type of end-of-year journal entry to correct this? Or backtrack and correct initial entries (this has its own issues as initial year was 2017)?
Solved
Best answer February 20, 2019

Best Answers
Rustler
Level 15

Acquired assets of an established corp, and created a new corp to house them. The former owner is carrying the note on the acquisition. How do I record inventory assets?

the problem is your starting value being posted to a liability account

 

the loan should have been entered and off set to a cash type bank account
then you "buy" the inventory items using the cash type bank account
if you do it that way COGS will be right both cash and accrual basis

 

Journal entries should be the exception when using QB, they often do not work as you think they should, and when you use inventory type items they never work for inventory. It is much better to use the forms on the home page the way QB is designed to be used. Journal entries also bypass accrual/cash reporting, and will not show on many reports.

 

Another way to get it done, would have been to create the loan account with a starting balance, that would have posted to opening balance equity

 

then create each inventory item with qty and cost, that also posts to opening balance equity offsetting the loan amount.

View solution in original post

qbteachmt
Level 15

Acquired assets of an established corp, and created a new corp to house them. The former owner is carrying the note on the acquisition. How do I record inventory assets?

You use the Buy/Sell info. Like this:

 

Assets = Liab + Equity

 

So, Inventory and other assets are entered, offset to Equity

Then, Debt is entered, offset to Equity

 

And now Equity shows the Net. That's why a synonym for Equity is "Net Assets."

View solution in original post

3 Comments 3
Rustler
Level 15

Acquired assets of an established corp, and created a new corp to house them. The former owner is carrying the note on the acquisition. How do I record inventory assets?

the problem is your starting value being posted to a liability account

 

the loan should have been entered and off set to a cash type bank account
then you "buy" the inventory items using the cash type bank account
if you do it that way COGS will be right both cash and accrual basis

 

Journal entries should be the exception when using QB, they often do not work as you think they should, and when you use inventory type items they never work for inventory. It is much better to use the forms on the home page the way QB is designed to be used. Journal entries also bypass accrual/cash reporting, and will not show on many reports.

 

Another way to get it done, would have been to create the loan account with a starting balance, that would have posted to opening balance equity

 

then create each inventory item with qty and cost, that also posts to opening balance equity offsetting the loan amount.

View solution in original post

Malcolm Ziman
Level 10

Acquired assets of an established corp, and created a new corp to house them. The former owner is carrying the note on the acquisition. How do I record inventory assets?


@SignEnhancers wrote:
In entering inventory starting values I assigned them to the long-term liability acct 

How did you do that?  If you enter Qty and Cost in the new item set up screen, the offset goes to Opening Balance Equity, which can't be changed

Never mind; I see it can be changed (but should not be)

qbteachmt
Level 15

Acquired assets of an established corp, and created a new corp to house them. The former owner is carrying the note on the acquisition. How do I record inventory assets?

You use the Buy/Sell info. Like this:

 

Assets = Liab + Equity

 

So, Inventory and other assets are entered, offset to Equity

Then, Debt is entered, offset to Equity

 

And now Equity shows the Net. That's why a synonym for Equity is "Net Assets."

View solution in original post

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