We sell artwork on consignment in a brick and mortar shop. As recommended by others, we've been using Purchase Orders to track items in POS, and receiving items as they are sold. We then pay bills at month end in Quickbooks Desktop.
We want to add an online store, and need to have a more accurate way to account for consignment inventory. I think I've come up with an account mapping between POS and Desktop that will allow us to do this.
Income Account - Consignment Sales
COGS - COGS
Asset Account - Inventory Asset
Purchase Clearing - Inventory Asset
When we receive items we don't include billing information. The inventory shows up correctly in POS. In Desktop, Inventory Asset Account transactions cancel each other so there's no impact on the consigned goods.
At the end of the month, we generate a sales report for each artist from POS and enter and pay a bill for the total of items sold during that period.
Everything seems to work until we need to return unsold consigned artwork to our artists. When we process the vendor return in POS, the transaction that posts in Desktop is an unnecessary credit memo.
My questions: (1) Can you see anything wrong with our approach to tracking consignment items? (2) Is there a way to process a return to vendor that won't generate a credit memo? (3) If not, is there an issue with manually deleting the credit memo in Desktop?
