Landed Cost

[g2ktcf]

I have a similar question to this post...http://forums.quickbooksusers.com/sh...ad.php?t=28802

I buy some quite inexpensive items that are costly to ship to me. I need to have my item cost be the purchase price PLUS my shipping cost. This landed cost is what it takes for me to analyze things correctly. My PO has only the base cost. How do I receive these properly and get the freight cost included in the inventory.

Also, is there any accounting downside to lumping in freight costs with the item?

Thanks,
Chris

[ScottPAC]

Chris, I have a similiar problem. However, my costs come from two different suppliers ... the manufacter and the freight forwarder. My solution is to put the costs into two separate inventory accounts (prepaid, other current assets) and then combine them using an inventory assembly to bill them out. I'm using the Premier version. In the Pro version, I had to do everything using journal entries and found we were making a lot of errors. Hope this helps.

[g2ktcf]

Scott,

I am about to face the same issue as I begin to handle my own purchases from Asia. I am the only one doing the work so JEs are fine. I have the CEO Title... Chief Everything Officer!

Thanks,
Chris

[Joe Williams]

You could enter Shipping Cost bill using an Other Current Asset account named "Landed Expenditure". When you enter the bill for the inventory add the shipping cost to the items based on either quantity or weight to put the total cost to the inventory item then on the Expense tab enter the shipping cost to "Landed Expenditure" as a negative amount. This will allow you to track the shipping cost and also include it in the item cost.

[RobJoy]

Here's another way. I'll explain it by example.

I buy 100 widgets at $2 each. Freight cost $50, packaging for sale $30.

Receive the vendor bill as it looks: quantity 100, unit price $2. Enter the freight and packaging costs however you normally do it. (but you might want to put them into Other Current Asset accounts, because they are part of inventory value.)

Now enter my favourite tool, the zero-value bill. It will perform the function of an inventory value adjustment with considerably less pain. On the expense tab enter minus lines to cancel out your postings of freight and packaging, on the item tab enter the first line as quantity -100, line total -200.00, second line quantity +100, line total 280.00. Date this bill the day after the vendor bill. Hey presto, your average unit cost is now landed cost.

[g2ktcf]

Originally Posted by Joe Williams

You could enter Shipping Cost bill using an Other Current Asset account named "Landed Expenditure". When you enter the bill for the inventory add the shipping cost to the items based on either quantity or weight to put the total cost to the inventory item then on the Expense tab enter the shipping cost to "Landed Expenditure" as a negative amount. This will allow you to track the shipping cost and also include it in the item cost.

Thanks Joe,

I believe this is how I will do it I just created the Landed Expenditure account as a sub of Inventory Assets. I will have to practice a bit until I know this works correctly.

[Joe Williams]

DO NOT make the Landed Expenditure account a sub account of
Inventory Asset. Make it's own account then enter the bill for it first and it should zero out after you enter the bill for inventory.