I have a remodel contractor client and need to be able to post / transfer purchased inventory items to individual projects as used. The normal accounting flow should be:
1. Create inventory item
2. Record purchased items to inventory by item and update quantity on hand for each item n inventory. Inventory Account would be increased by the amount of purchased items.
3. When an item is used on a project the item should be relieved by a process to remove item from inventory with dollar and quantity totals posted to the Project and listed on the projects reports. The cost should also post to specific general ledger accounts as required for cost tracking.
This is not happening within QBO Plus. I was told by QBO salesperson that this was possible. The only "work around" I have discovered is to create a "0" sum Bill to relieve inventory and post to the project. This a very cumbersome and inefficient way and time necessary to be sure the quantity and amounts posted have me rethinking my purchase of QBO.
Any help would be appreciated
1. The first factor is whether you are using the accrual or cash basis accounting method, as with a cash basis reporting the income and cost will not post until payment for items sold is posted. With an accrual method the income and COGS are recorded at the time of sale.
2. The first step is to setup the customer, then setup the products and services, which are mapped to specific income and COGS accounts upon setup, then setup projects under each customer.
3. Once you have done the above steps, you select the "project" under the customer name with each purchase and customer invoice, this is how income and expenses post to your projects. If you create projects "after" income and expenses have been recorded, you will need to edit and map the customer invoice and expenses to the related project and re-run your reports.
I understand how to post purchases to projects. I am using the accrual method of accounting. The problem is that we bring a pallet of grout (20 bags) into inventory and use 1-2 bags per job. QBO does not provide an efficient method of charging goods taken out of inventory and posting to the Project Transaction Ledger and project reports. Still looking for the best method.
One "solution" provided was to set up a fictitious vendor and using Add A Bill in the Project section post the item as a plus to the project and then add a line item to the Bill of the same item as a negative without assigning to the project. This did post the quantity and cost to the Project Transaction Ledger and show on projects reports. However, this did not relieve my Inventory account of quantity or dollars. Had to do a journal entry to balance inventory and COGS.
Basic Accounting Theory and GAAP....
this statement bothers me
However, this did not relieve my Inventory account of quantity or dollars. Had to do a journal entry to balance inventory and COGS.
You can NOT use a journal entry for inventory type items, nor can you use inventory asset in a purchase or an adjustment.
QB is designed where nothing posts to inventory asset, it is a summing account, think of the items as sub accounts where cost and qty is held
you also stated
update quantity on hand for each item n inventory. Inventory Account would be increased by the amount of purchased items.
I have no idea what you are referring to, but the purchase increases item qty and total value of each item purchased, nothing else.
QB is designed so on a purchase you use the item details part of the transaction, you select the items, qty of each and the total cost of each - that stocks the items with cost and qty
then you use the inventory item on an invoice or sales receipt - that posts item cost and income.
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.
I agree with Rustler on all points.
Journal Entries are not the answer and will not meet your objective. The purchase and sale of products and services will control your inventory quantity on hand. On an accrual basis, the inventory will be adjusted when you purchase items and when you sale items, whether by sales receipt or customer invoice. If you have purchased an item for a project, simply select that project under the "Customer" field within your PO, Vendor Bill or Expense Entry. Make sure you have turned on all of related "Account and Setting" features to track inventory on hand by customer.
As stated earlier, my client is a contractor, not a retail establishment. I discussed my needs to relieve bulk inventory with salesperson and was assured this is possible. However, it is not. To get an inventory item to posy to eh Project Transaction Ledger it MUST be listed on an invoice as a billable item. My client does progress billing, not item billing.
Some of you comments explain why I cannot get a true value of inventory. My client has never used true Inventory accounting and we have a warehouse full of items to recognize as an asset.
Thanks for your input.
@HCRCA I have been struggling with this issue as well, and it seems like they pushed out Quickbooks projects before they were ready. Were you able to find a reasonable workaround?
I do my books as Cash and cant get any vaid reports out of Projects. I've tried with both $0 invoices and sales receipts (it seems to adjust quantity properly) by I don't get a clean view of profitability, and have to do everything over in Excel