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pbymike
Level 1

Inventory Starting Assets and Special Vendor

I just started a new company in QuickBooks online “Essentials” and used the startup service from QuickBooks to get everything where it should be. The last items I need to set up are the Inventory and a special Vendor. I use a use a third-party app for shipping and keeping track of inventory which is accurate and gives me a running cost value of my inventory.

My vendor is in Africa and makes my products with their materials then ships them to us, they require a Deposit to produce the product which I wire with each order and then wait for finished products. I was instructed by QuickBooks Startup to setup a “Pre-Paid Inventory {Clearing} account as a Bank/Cash on Hand to act as holding area for the deposits sent and keep track of what was received which would give me a running total. I have done that and it shows the balance of the Deposits made but I still have to find a way to keep a running total for inventory assets/COGS and a way to post inventory items received against the Deposits made to the Vendor.

Any help would be appreciated, Thanks.

Solved
Best answer February 21, 2020

Best Answers
Rustler
Level 15

Inventory Starting Assets and Special Vendor

set the vendor up in QB, when you pay the deposit, use accounts payable as the expense (reason) for the payment.  That will set a vendor credit, when the bill comes in enter the bill and in pay bills, apply the credit (deposit) and pay the balance when ready

 

There are two ways to do periodic inventory, choose one and stick with it, you can not mix and match

 

1. (my preference) Create an asset account called purchases and post all purchases of item for resale to that account. Periodically, weekly, monthly, etc value the inventory on hand, subtract that value from the amount shown in the purchases account and do a journal entry for the answer to the subtraction
debit COGS for that value
credit purchases for that value

 

OR

 

2. Post all purchases to COGS. Periodically, but at least at the end of the year, you value the inventory on hand and do a journal entry.
debit the asset purchases account for that value
credit COGS for that value

Print the P&L
then reverse the journal entry
debit COGS for that same value
credit the asset purchases account for that value

 

This last journal entry, moves the value of what was on hand at the end of year back to COGS so the cost will be counted against the new year sales.

View solution in original post

1 Comment
Rustler
Level 15

Inventory Starting Assets and Special Vendor

set the vendor up in QB, when you pay the deposit, use accounts payable as the expense (reason) for the payment.  That will set a vendor credit, when the bill comes in enter the bill and in pay bills, apply the credit (deposit) and pay the balance when ready

 

There are two ways to do periodic inventory, choose one and stick with it, you can not mix and match

 

1. (my preference) Create an asset account called purchases and post all purchases of item for resale to that account. Periodically, weekly, monthly, etc value the inventory on hand, subtract that value from the amount shown in the purchases account and do a journal entry for the answer to the subtraction
debit COGS for that value
credit purchases for that value

 

OR

 

2. Post all purchases to COGS. Periodically, but at least at the end of the year, you value the inventory on hand and do a journal entry.
debit the asset purchases account for that value
credit COGS for that value

Print the P&L
then reverse the journal entry
debit COGS for that same value
credit the asset purchases account for that value

 

This last journal entry, moves the value of what was on hand at the end of year back to COGS so the cost will be counted against the new year sales.

View solution in original post

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