Inventory expense question

Hello there, @FP98.

I'm here to help you with your inventory concerns in QuickBooks Online (QBO).

Based on your scenario above, you can record this as a billable expense transaction since you want to pay for the items while creating an invoice for a particular customer. Also, please note that this feature is available in QBO Plus and Advanced versions. To do this, you can follow the steps below.

First, let's make sure to enable billable expense tracking in QBO:

1. Go to Gear ⚙ icon, then select Account and settings.
2. Select the Expenses tab, then select Edit ✎ from the Bills and expenses section.
3. Turn on the Show Items table on expense and purchase forms, Track expenses and items by customer, Make expenses and items billable.
4. Set up the other necessary options.
5. Click Save and Done.
   

Then, we can now proceed to enter a billable expense. Here's how:

1. Click the + New button, then select Bill.
2. Choose the payee.
3. From the Item details column, select the product/service item.
4. Enter the description and amount of the expense. Then, select the Billable checkbox.
5. In the Customer column, choose the customer you want to bill for this expense.
6. Fill in the other needed fields.
7. Click Save and close.
   

Lastly, we can now link the billable expense to your customer's invoice:

1. Click the + New button, then select Invoice.
2. In the Customer ▼ dropdown menu, select the customer you created a billable expense for. This opens the Add to invoice window.
3. Select Add on the billable expense you want to charge to your customer.
4. Click Save and close.
   

For your next query, you're right that it will be posted to your Cost of Goods Sold (COGS) account. To review the account posting, you can just click the More button at the bottom of the sales transaction page, and then select Transaction journal.

For your last concern, normally this won't create a double posting if you have just recorded the billable expense correctly.

Additionally, I'm including this reference that is helpful in checking the best sellers, what’s on hand, the cost of goods, and more among all of your items: Use reports to see your sales and inventory status.

Feel free to leave a comment below if you have any other questions about QuickBooks. We're always here to make sure everything is sorted out. Take care and have a great day!

@FP98 

This sounds like consignment inventory.

You do not record inventory consigned to you as inventory at all.  Consigned inventory stays on the books of the consignor (vendor) since they own it.  And, since you do not record it in your inventory, you do not post the sale of consigned inventory to COGS.  COGS is only used when you have beginning and ending inventory which you don't have - the consignor does.  When you sell the consigned inventory, pay the vendor using an expense account called "Consigned inventory sold" or "Cost of sales" or something similar.  

Here is what the IRS says (Publication 334):

Do not include merchandise you receive on consignment in your inventory. Include your profit or commission on merchandise consigned to you in your income when you sell the merchandise or when you receive your profit or commission, depending upon the method of accounting you use.