Question

Need to BEGIN tracking inventory value

Forum|Forum|3 years ago
December 31, 2022
1 reply
5 views

Hi!

This may be challenging!! How do we begin tracking the inventory value of products we assemble? We've been tracking inventory quantities on the components, removing and adding as needed without inputting costs. It creates a nightmare when trying to figure out inventory value at year end. We'd like to enter the costs of all the inventory (components) we just counted at end of year for a clean slate January 1st.

Background:

We assemble products (such as soap dispensers) from 2 inventory components (bottle and pump), and sell the final assembled products alone or in sets.

We reduce the inventory components from stock as they go out via quantity adjustments. I.e. we sell a plastic bottle with a pump (an assembled soap dispenser), we remove both components from inventory.

We use sales receipts for groups of sales (i.e. each pay period from marketplaces like Amazon). We just enter the product as an inventory item called "Sales".

How do we do start entering the costs for our components, so we at least can add them to inventory with costs as we purchase in the future, and have the value automatically subtract when we reduce them from inventory?

We could start scratch by archiving and recreating inventory products with values- but won't that count the COGS twice? (We already have our expenses accounted for as COGS s we purchased components, they're just not tied to inventory items.)

Hope that's clear, and I hope someone had a solution!

Thanks!

Christine

QuickBooks Online

katherinejoyceO

Level 9

Hello there, @ArtanisHome.

I'm delighted to guide you in tracking your inventory value in QuickBooks Online.

Here's how:

On the left panel, click the Sales menu, then go to the Products and Services.
Select the item you're working on from the list and click the Edit button in the Action column.
Click the Quantity on hand section and hit the Starting value link to see more information about the product.
Select Got it to confirm, then review the item details on the Inventory Starting Value # Start page to ensure the data entered is correct.
Update and enter all the information needed, then click Save and close.

Visit this article to learn more about managing your inventory quantity: Inventory Quantity Adjustment in QuickBooks Online.

Drop me a line and I'll assist you with more concerns about inventory reports in QuickBooks. I wish you the best of luck!

A

ArtanisHomeAuthor

Hi Katherine,

Would I set the initial quantity on hand as my current quantity, and put "as of" today?. What do I do if, say, I have 10000 pumps currently, 3000 were bought at $0.25, 4000 were bought at $0.24, and 3000 were bought at $0.26?

What would I put for the Inventory adjustment account? If I put "Cost of Goods Sold" as the Inventory adjustment account, wouldn't this double my COGS, since I've already accepted the products as COGS expenses as I purchased them throughout the years?

Thanks!

Christine

Rainflurry

Level 11

@ArtanisHome

There's a lot to unpack here.

When you set up each bottle and pump as an inventory product, you need to fill in the initial quantity that is accurate on the "As of date" you input into QB. In the "Cost" field, you will need to enter the average cost of that item in stock. So, in your example, you will calculate the average cost of 3,000 @ $0.25, 4,000 @ $0.24 and 3,000 @ $0.26. (3,000 X .25) + (4,000 X .24) + (3,000 X .26) / 10,000 = $0.249. That will set your initial inventory value for that pump at $2,490. When you buy that pump in the future, the cost will be updated automatically based on the price you enter on the vendor bill. So, if the next time you purchase them, the cost has increased to $0.27, QB will adjust the cost and you will have an accurate valuation for that pump at all times. Under "Sales price/rate", you want to enter the price that you charge for that bottle or pump if sold separately. Do the same process for each bottle and pump you want to set up.

You should not be recording the cost of bottles and pumps purchased to COGS. When you purchase bottles and pumps in the future, they should be placed into inventory (this happens automatically when they are entered from a vendor bill) and expensed to COGS when sold to your customer (this happens automatically when sold on a sales receipt/invoice). Inventory is not an expense to a business until you sell it to your customer. Therefore, make sure you have COGS selected as your expense account under "Purchasing Information" when you set up each inventory product.

At this point, you have every bottle and pump entered into inventory. Now, you will need to set up a product bundle to sell a bottle and pump together. To do that, select the Bundle option and name it what you want. Under "Product/Service", you will need to select both a bottle and pump to create the bundle. However, QBO does not allow you to price the bundle separately from the sum of the costs of the individual products in the bundle. Presumably, your dispensers are less expensive than if you added the price of the bottle and pump together. If that's the case, a good workaround it to create a service item called "Bundle Discount" or something similar and add it to each bundle. When you set up the Bundle Discount, you will have to price it at a negative amount equal to the difference between the retail price of a dispenser and the pump and bottle separately. Lastly, when setting up the product bundle, make sure the box next to "Display bundle components when printing or sending transactions" is not checked. If it's checked, your customer will see the details of the bundle.

You should not have to make any inventory quantity adjustments until you find discrepancies during physical inventory checks in the future.

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