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Level 4

Hi. I need help with the relationship between inventory accounts for livestock and converting them to processed cuts for sale.

I guess this is a multi-part question for Desktop Pro Plus 2020. The first part has to do with treating livestock as inventory. The bulk of my livestock are purchased as feeders, rasied, then taken to a butcher. We then sell individual cuts of meat after they are processed. Am I correct that, when I purchase the livestock, I add their purchase cost to a fixed asset account?

The second part is, how do I add the individual cuts as items for sale? In the item list where you create products for sale, there doesn't seem to be an option for inventory items.

Finally, are processed cuts of meat even inventory? I know that the livestock are inventory, but I am unsure if the cuts that come from them are. In any event, how do I track the sale of the cuts back to the fixed asset account I create for the livestock.

Sorry for the long post. I hope this makes sense.
Solved
Best answer 01-03-2020

Best Answers
Highlighted
Moderator

Hi. I need help with the relationship between inventory accounts for livestock and converting them to processed cuts for sale.

Hello @PVOLLC,

 

As of the moment, tracking your items with the unit of measure is only available for the following products listed below:

  • QuickBooks Accountant
  • QuickBooks Premier Contractor
  • QuickBooks Enterprise Solutions

If you're not using these products, you may want to consider manually tracking your inventory items.

 

That being said, you'll need to create two sets of items, one for the inventory (pigs) and the other is for the invoice transaction (cuts). Since you're not tracking the quantity of the meat for invoices, you can consider it as a non-inventory item.

 

Further, you'll have to manually adjust the quantity of your items upon creating every transaction. Once the inventory (pigs) has been processed as meat and ready to be sold, it'll remove an item on the total quantity of your inventory.

 

To illustrate:

  • Raising a pig = additional count of your inventory
  • Invoice for your customer = removes an item of your inventory even though you're selling only the meat

I've got you this helpful article to learn more about how you can manually track the quantity of your inventory: Set up Advanced Inventory.

 

If there's anything else that I can help you with, please let me know in the comment section down below. I'm always around happy to help.

View solution in original post

8 Comments
Highlighted
Level 4

Hi. I need help with the relationship between inventory accounts for livestock and converting them to processed cuts for sale.

I'm sorry. I realize that I misstated livestock as fixed assets. They are not; they are inventory assets unless they are for breeding.

Highlighted
Moderator

Hi. I need help with the relationship between inventory accounts for livestock and converting them to processed cuts for sale.

We're unable to determine which account you need to use, PVOLLC.

 

If you're not sure on what account to use, I recommend reaching out to your accountant. The will be able to help you on that.

 

As for the individual cuts for sale, you can add them as a regular item. Here's how:

  1. Click Lists from the menu.
  2. Select Item List.
  3. On the Item List window, click Item then New.
  4. Select the type of item you want to create.
  5. Fill in the item fields.
  6. Click OK to save.

We can only guide you through setting up inventory items and accounts. Reach out to your accountant to make sure you're using the right account.

 

Here are some articles that can help:

I'll be around if you have more questions. Don't hesitate to leave a reply.

Highlighted
Level 4

Hi. I need help with the relationship between inventory accounts for livestock and converting them to processed cuts for sale.

I'm sorry, I thought I clarified but my post was pretty jumbled. I don't need you to tell me what kind of account I need to assign to various things. Let me ask it this way...

 

I know that livestock for sale are Inventory Assets. How do I link my sales of individual cuts to the Inventory Asset account I have for my livestock?

 

For example, say I buy 10 pigs. I enter them into QuickBooks as Inventory Assets. I then take one pig to market and have it processed into individual cuts of meat. I then sell those cuts of meat to a customer. How do I set up QuickBooks so that both my COGS for the individual cuts and my income for the individual cuts properly debit the Inventory Asset account?

Highlighted
QuickBooks Team

Hi. I need help with the relationship between inventory accounts for livestock and converting them to processed cuts for sale.

Thanks for adding more details about your concern, @PVOLLC.


We’ll have to use the Unit of Measure feature to properly track the inventory items. Here’s how:

 

  1. Go to the Edit menu at the top to select Preferences.
  2. Choose Items & Inventory on the left panel to access the Company Preferences tab.
  3. In the Unit of Measure section, tap the Enable button.
  4. This will open the Unit Measure window.
  5. From there, select which type you want to use and follow the onscreen instructions to complete the process.
    umm.png umm1.png umm2.png

After adding it, let’s add the meat cuts as inventory items in QuickBooks.

 

  1. Navigate to the Lists menu at the top to choose Item List.
  2. This will open the items/services recorded in your company file.
  3. Scroll down to the Item section and click the drop-down to choose New.
  4. Pick Inventory Part as the Type.
  5. Enter a term that will identify the product, and then select the correct Unit of Measure.
  6. Fill in the remaining field boxes.

When adding a product, QuickBooks automatically sets the Cost of Goods Sold and Inventory Asset accounts. The desktop program will debit the Inventory Asset account every time you create a transaction.

 

For more in-depth details about the Unit of Measure option and how it can help the business efficiently manage items, check out this article: How do I?


If there’s anything else I can help you with, leave a comment below. I’ll be right here to assist further. Have a good one.

Highlighted
Level 4

Hi. I need help with the relationship between inventory accounts for livestock and converting them to processed cuts for sale.

Thank you for this. The Enable Unit of Measure Button is greyed-out.

Highlighted
Level 4

Hi. I need help with the relationship between inventory accounts for livestock and converting them to processed cuts for sale.

Also, I should probably clarify a bit more about how my business works.

 

I raise a pig. I take it to the butcher. The butcher processes the pig into cuts. The cuts are then picked up and taken directly to my customer. I invoice my customer for them.

 

Because of this, I never actually carry the individual cuts as inventory. The inventory units are the pigs themselves; they're converted into cuts at the butcher.

 

So even though I'm billing my customer for the cuts (because they buy by the cut), I never have the cuts themselves as inventory. I would like to be able to track this conversion (Inventory=Pig to Invoice=Cuts).

Highlighted
Moderator

Hi. I need help with the relationship between inventory accounts for livestock and converting them to processed cuts for sale.

Hello @PVOLLC,

 

As of the moment, tracking your items with the unit of measure is only available for the following products listed below:

  • QuickBooks Accountant
  • QuickBooks Premier Contractor
  • QuickBooks Enterprise Solutions

If you're not using these products, you may want to consider manually tracking your inventory items.

 

That being said, you'll need to create two sets of items, one for the inventory (pigs) and the other is for the invoice transaction (cuts). Since you're not tracking the quantity of the meat for invoices, you can consider it as a non-inventory item.

 

Further, you'll have to manually adjust the quantity of your items upon creating every transaction. Once the inventory (pigs) has been processed as meat and ready to be sold, it'll remove an item on the total quantity of your inventory.

 

To illustrate:

  • Raising a pig = additional count of your inventory
  • Invoice for your customer = removes an item of your inventory even though you're selling only the meat

I've got you this helpful article to learn more about how you can manually track the quantity of your inventory: Set up Advanced Inventory.

 

If there's anything else that I can help you with, please let me know in the comment section down below. I'm always around happy to help.

View solution in original post

Highlighted
Level 4

Hi. I need help with the relationship between inventory accounts for livestock and converting them to processed cuts for sale.

Excellent explanation! Thanks everyone.

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