Hello,
I have a very specific inventory/COGS problem because we have a specific type of business:
-We manufacture boats. We aren't using "raw materials" as we purchase the boat hull (main and biggest part of the boat) and then we do the rigging of the boat (adding the electrical, plumbing, etc). Most everything we purchase becomes a component of the boat we build. Nothing is ever purchased, put into inventory, and then re-sold. They are simply purchased and then that's it. Then the sale of the boat is just entered as income. So what's being purchased and then being used in the build is ultimately being sold but not lined up with the actual sale.
I am new to the company and this is the company's first time using QB. They created their own financial statements last year...so I started off using their 2020 ending balances (including using their ending inventory amount as the beginning inventory amount for 2021). I have been entering every single transaction as a journal entry (easiest way for me). Therefore, every purchase made (for a component of the boat build) I entered as COGS (COGS-electrical, COGS-hardware, COGS-accessories). As I explained above, I never put anything into inventory. This appears to be my biggest mistake. I assumed I could use the beginning inventory number, add the purchases, then subtract the ending inventory amount provided to me from the physical/manual inventory count. Because I did it this way, the P&L just shows a total of "COGS", which is actually just a total of the purchases. I didn't think it was that important to keep track of inventory in a "work in progress" type of way since we build so few boats and not every boat has the same components and we don't hold on to inventory. Everything we buy for the boats goes on the boats and then is sold. I decided to create my own P&L as well to accurately show beginning inventory, purchases made, and then ending inventory to calculate COGS. This creates a very different COGS amount as well as Net Income amount which unfortunately affects the balance sheet now.
I know this is a huge mess, but for the sake of moving past this and making sure we don't do the same thing this year...I would appreciate ANY info/advice possible!!
