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Gingin522
Level 1

Non-cash inventory loans

Company A purchases items for Company B as Company B is getting started and did not have the capital to fund itself.  I typically do a general journal entry in Company B to record the purchases and the amounts as a loan from Company A.  Company A purchased some inventory for Company B and I recorded it to the Inventory Asset.  At the same time, I entered "items received without a bill" thinking that it would not affect the Inventory asset account, wrong!  Ugh.  So now, I have an inventory nightmare to figure out.  I will just transfer the funds for the purchases in the future, but I need to correct the Inventory Asset account.  How can I record these loans without affecting my inventory assett account?  I am using Quickbooks Pro 2015.  Thank you!

2 Comments 2
Rustler
Level 15

Non-cash inventory loans

The account inventory asset should never be posted to. It is a summing account and the items are basically sub accounts with qty and cost. So if you used it in a transaction, that is the first thing that needs to be changed or deleted. You can not, if you use inventory items, post to inventory asset with a journal entry or any other type of entry

 

Items received without a bill, does affect inventory, as long as you used items, inventory items. So if there was no effect to inventory asset I have no idea what you did in the entry.

 

One time you say A buys from B, then you say you are treating that purchase as a loan. It can not be both.

 

When you borrow money to buy inventory, that does affect inventory asset since you are entering the items you purchased. Just as entering a bill, which is basically borrowing money until paid, does.

Gingin522
Level 1

Non-cash inventory loans

I am sorry, I think you misread my explanation.  Company A purchased inventory items FOR Company B.  Company B now owes Company A for that purchase - which I was recording as a loan from Company A to Company B.  I am not sure how to record it as instead of Company A just giving the money to Company B, Company just paid for the inventory directly to the vendor.  How can I record that amount of money into Company B so it shows as an amount that is owned to Company A?

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