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We are a small mattress manufacturer, and have used QuickBooks Premiere Manufacturing and Wholesale for the past 17 years, but ONLY to create invoices. We want to begin using QuickBooks to actually run our entire business, and are trying to figure out how best to do this.
Our goal at first was to enter all bills, checks, etc for all of 2017 in order to be ready on Jan. 1, 2018. However when our item list was created originally all of our mattresses (that we manufacture) were set up as Inventory Assemblies. The problem is we never utilized Inventory Parts, and therefore never entered a Bill of Materials for any of the mattresses (assemblies).
If we continue to try using QuickBooks this way (empty Bill of Materials) will that cause any issues with accounting and/or reporting??
Ideally we would track all of our components (foam, fabric, steel, etc) as Inventory Parts and actually properly build each mattress as an Inventory Assembly... but the problem is our item list is over 1,000 items and we simply don't have the resources to put this all together... plus we really don't care to track inventory! Our mattresses are made-to-order and ship within a day, so tracking inventory really isn't necessary for us.
So... would it make the most sense to create a new company file, turn off inventory completely, and create all of our mattresses as Non-Inventory Parts?? Or are we ok continuing with our current setup with Inventory Assemblies, but they have empty BOM's and we don't care about inventory levels at all?? (this would be great as we wouldn't have to redo our item list, or create a new company file)
Any insight into this would be GREATLY appreciated!!
Thank you!
Solved! Go to Solution.
You created inventory assemblies, but you never entered a BOM, edit the assembly item and insure the listing area of parts to be used is blank - is it?
Have you been selling the assembly item?
After 17 years that file is going to be hard to fix depending on exactly what is wrong, and fixing it may impact on previous IRS returns, which might require amended returns.
If it was me I would continue as you have been this year, and use the rest of this year to set up a new company file.
As far as inventory and making your product, I would use the periodic inventory method and not mess with QB inventory at all. QB inventory does not deal with scrap or left overs at all in an assembly item
Use a service item to sell the various models of product you make
Using
periodic inventory will require you to keep a listing outside of QB of
product and model assembled that are on hand, but once you get a system
set up it should be ok
---------
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.
You created inventory assemblies, but you never entered a BOM, edit the assembly item and insure the listing area of parts to be used is blank - is it?
Have you been selling the assembly item?
After 17 years that file is going to be hard to fix depending on exactly what is wrong, and fixing it may impact on previous IRS returns, which might require amended returns.
If it was me I would continue as you have been this year, and use the rest of this year to set up a new company file.
As far as inventory and making your product, I would use the periodic inventory method and not mess with QB inventory at all. QB inventory does not deal with scrap or left overs at all in an assembly item
Use a service item to sell the various models of product you make
Using
periodic inventory will require you to keep a listing outside of QB of
product and model assembled that are on hand, but once you get a system
set up it should be ok
---------
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.
That's not true. There is no Default. The assumption is that
there are things you buy or sell or buy and sell; but any item is
linkable to nearly any account.
It is true
Default = means the way it is set up to start with when you create a NEW item.
Sure you can modify it - modify is not an attribute for default.
Service asks for income, non inventory asks for expense - no one said you can not select only those kinds of accounts
"We have ONLY used QuickBooks for creating invoices, nothing more."
Then, I would treat this as a Transition task, as if you are New to QB. Start a New Data File.
Hi Rustler,
I see you are very knowledgeable in QB. For material items, such as paint that is bought to provide a service (we buy paint to do paint jobs on cars), we categorize it as non-inventory. However, we don't invoice for it because those materials can be used for multiple jobs. We just restock when we're running low. Also, we don't really want to use QB to track it (as of right now). But also, we don't want to mess up our reports. Would we do a journal entry as well as you had stated? If so, could you please provide an example. Thank you so much for your help.
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