Build Assemblies in COG's

Hi @Kevans27,

Thank you for posting here in the Community. I know how important it is to balance your accounting books. To help you fix this, you'll need to make sure the items included in the inventory assembly are set up correctly to their appropriate accounts. Let me guide you how:

1. Go to Lists, and choose Item List.
2. In the list of items, double-click the item that needs to be corrected.
3. Choose the appropriate 'cost of goods sold' account in the COGS Account drop-down arrow.
4. In the Income Account drop-down arrow, select an 'income' account.
5. Click OK.
6. If you are prompted with an Account Change pop-up window, select Yes.

The screenshots below show you the third to sixth step.

Let's do these steps in all your inventory and non-inventory items, as well as your inventory assembly itself, to make sure they are set up accordingly.

You might need to record an adjustment every now and then, you can refer to this link: Adjust your inventory quantity or value in QuickBooks Desktop.

Please know that I'm here anytime you have other concerns.

I apologize for the delay. I hope I can explain this enough to get the help I need. I am in accounting trying to help the purchasing manager understand the process. There are a couple of things going on here that I just can't wrap my head around.  To explain what I have going on, take any item entry, as the one you did a walk through in your previous post on how to enter.  In ALL inventory item entries that have been entered since this business opened 2 years ago, the COGS account is "Purchase-Cost of Goods Sold" and the Income account is "Purchase-Cost of goods sold". (first attachment) In my accounting mind there is no way this is correct.  The end of the year adjustments are mind boggling.  This is going in and out of the same account?  Shouldn't the income account be specific?  I know this is incorrect, but explaining and finding the fix as in what income account to post to is my issue.  I am proficient in accounting but I have no experience in inventory management or item entry.  We are a manufacturing facility,  jobs (units we are manufacturing) are numbered, an item is then created with that job number. All inventory and non inventory items are listed "within" the job,  however, this main "job item" is what is entered and billed on the customer invoice. (second attachment) The inventory and non inventory items are not listed separately on the customer invoice, only the main job. In this job number item entry, the COGS account and Income account are correct.   But in the actual inventory items they are not. I AM SO CONFUSED!!!!  I have never dealt with a system that did not put items to inventory and then bill those items out on the invoice to the customer which then relieved inventory.  That is not the case here and maybe why she was originally taught to do the entries this way?? 

It would only allow one attachment in my prior post.  Please see second attachment as mentioned in my post.  thank you! 

Thanks for the screenshots, Kevans27.

You're correct. Use the Income Account field to select which account you want to use to track income when items are sold. Otherwise, both purchases and sales amount will be posted in the COGS account. This is the reason why the amount in the COGS account is greater than what it should be.

You can change the selected account from Purchase-Cost of Goods Sold to an income account. Before making any changes, it's recommended to create a back up copy. This is to make sure that you can restore or undo the any modifications made to your settings.

Follow the steps in this article on how to save a backup file: Back up your QuickBooks Desktop company file.

Once done, proceed to changing the account by following these steps: 

1. Go back to your Item list and open the inventory item.
2. Click the drop-down list for the Income account and select the correct income account.
3. Click OK.
4. A prompt will ask you if you want to update the existing transactions. Click Yes if you want to proceed. 
5. Follow the same steps for the rest of the inventories. 

Once done, run your COGS report to check if the amounts are already correct. Let me also share these articles that can serve as additional guides when tracking inventory in QuickBooks: 

• Understand inventory assets and cost of goods sold tracking
• Add, edit, and delete items

Please add another reply below if you need anything else. As always, the QuickBooks Team is here to help you again. 

Hi, hoping I can ask a similar question. I've got the same problem with my COGS account being credited at the same time I build an Inventory item. See below a screenshot from a transaction report under the COGS account from my balance sheet. Can someone please explain why when I build an Assembly/ Inventory item (that is then sold later on an invoice), that the COGS account is being credited? I thought only the Inventory Asset account was debited during a Build transaction.. And yes my accounts are correct under the Item Listing i.e. Under COGS is the cogs account and under Inventory account is the Inventory Asset account. So why is this happening? Is this normal? I am not comfortable understanding COGS even after reading all the QB links. Thank you!

Hi there, @ljtaylorsale.

Build Assembly transactions will post to COGS if the item/s in the BOM of the assembly item asset to post on COGS. Also, take note that updating the posting account will not change the previously created transactions. Check with your accountant to know how to create the adjusting entries to fix your books.

On top of that, you can read this article to learn more about the average cost of your items in the last section of this article: Understanding inventory assets and cost of goods sold tracking.

Additionally, I've got you this helpful article for guidance in preparation for the 2020 tax season: QuickBooks Desktop Year-end Checklist.

I'm always around ready to help if you some clarifications regarding this. Just click the Reply button so I can get to you right away. Take care

Hi Mary, 

Ok, I understand that. Do you know how that amount is calculated? See below screenshot. I understand the typical "average cost", but my question is are both Inventory and Non-Inventory prices included in calculating an Assembly Build's average cost? In this screenshot, on the right is a Build transaction and on the left is the Item Listing for one of the Non-Inventory items included in the BOM. But my question is, in the right panel, how is the $4.56 determined to be credited from COGS? Where is QB getting this number from? You can see that the total of the 2 non-inventory parts is just 20 cents for this build transaction. Thank you for helping!!

Hey there, ljtaylorsales.

Thanks for providing that helpful screenshot. What you're going to want to do is contact our support team. They will be able to guide you further. Without being able to dive into your account I can't tell you the specifics of your account. That's exactly what our support team is built to do. You can speak with them in a private 1-on-1 setting and even screen share. To reach them, follow these steps:

1. Open QuickBooks.
2. Go to Help, then select QuickBooks Desktop Help.
3. Select Contact Us.
4. Give a brief description of your issue, then select Let's talk and then choose a way to connect.

Also, I suggest checking out our webinars and future events, where you can sign up for classes to learn the ins-and-outs of everything QuickBooks. Check them out here to sign up. Thank you for your time and I hope you have a wonderful evening.