Invoicing my customers for inventory items is not decreasing my inventory and increasing my COGS as it should. Help?
According to the following information (in quotes) I should not have to make Journal Entries to decrease my inventory and increase my Cost of Goods Sold. QuickBooks should automatically do this for me in addition to affecting my income account:
"Go to Lists > Item List, click the Item button, select New, and select Inventory Part. Here you can setup all three accounts involved – your cost of goods sold account, your revenue account and your inventory asset account. When you use the item on a purchase transaction (enter bills, write checks, enter credit card charges, etc.), it will automatically increase inventory. When you use the item on a sales transaction (create invoice, enter sales receipt, etc.), it will not only increase income but also increase cost of goods sold and decrease inventory."
So the only part of the above that is actually happening is that when I make purchases of inventory materials, that expense DOES increase my inventory balance. However, when I bill my customers for the inventory materials, it DOES NOT effect the COGS or the Inventory. It only effects income. So, I am having to make Journal Entries to post these transactions to the appropriate accounts, which is a huge pain. Also, I am not seeing the cost of the inventory materials reflected in my job costing reports until I make Journal Entries. Can anyone advise me what the problem might be?