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  #1  
Old 09-29-2010, 01:34 PM
martin05rc martin05rc is offline
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Destroyed or lost product or materials

In the course of doing business several scenarios can play out:
  • Raw materials/components can be damaged or lost
  • Assemblies can be damaged or lost
  • Finished product can be damaged or lost
  • Parts, assemblies and items purchased can be destroyed or damaged in R&D
  • Parts, assemblies and items can be lost or destroyed in shipping
  • Finished product is used for demonstration purposes and cannot be re-sold as new or at all

How do you deal with these situations in QB?
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Q: How can I setup Quickbooks to carry a 1.5 trillion dollar loss every year and stay in business?
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  #2  
Old 09-29-2010, 01:58 PM
RobJoy RobJoy is offline
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These can all be dealt with using my favourite gizmo: the zero-value bill.

You'll need one or more expense or COGS accounts to show the value of such losses - it's up to you and your accountant whether you dump them all into one 'Inventory losses' account, or have a number of sub-accounts under it to keep track of the different causes of loss.

Suppose you want to show the loss of 10 widgets, whose average cost (from the item detail or an Inventory Summary report) is $5 each. Record a bill with $50 against your Inventory losses account under the expense tab, and an item line with quantity minus 10, unit cost 5.00 under the item tab. Total value zero. You could use a special vendor name like "*Inventory losses", number them in some meaningful way and use the memo fields appropriately.

(The alternative is to use Inventory Adjustments and trust me, you don't want to.)
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  #3  
Old 09-29-2010, 02:11 PM
martin05rc martin05rc is offline
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OK, so you are "selling" the item at cost to "Inventory losses" and then charging "Inventory losses" the $50 ... so it is a zero sum game. Did I get it right?

Now, suppose that the item in question was manufactured 3 years ago. Hypothetically, it uses some components that have gold in them. The average cost of the items in question has gone up quite a bit because of this. When I turn them into a loss QB will use the current average cost, correct? Which is higher than what I actually paid for the stuff three years ago. Does this mean that there will be an imbalance in the force and that I'll need Luke Skywalker to help me defeat the Emperor? If so, how do I input Luke into Quickbooks once I create the problem?
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Quickbooks Premier 2010 Manufacturing Edition

Q: How can I setup Quickbooks to carry a 1.5 trillion dollar loss every year and stay in business?
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  #4  
Old 09-29-2010, 02:53 PM
RobJoy RobJoy is offline
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I can tell you're going to fit in well on this forum . . .

If you enter any transaction using an item, it makes its calculation of cost as at the date of the transaction. Clever, huh?
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  #5  
Old 09-29-2010, 03:13 PM
martin05rc martin05rc is offline
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Quote:
Originally Posted by RobJoy View Post
I can tell you're going to fit in well on this forum . . .

If you enter any transaction using an item, it makes its calculation of cost as at the date of the transaction. Clever, huh?
Thanks. Got to have fun with this stuff or it will kill me!

So...the $8.23 difference between what it actually cost when I manufactured the item three years ago and the actual cost today, when my 5 year old took a ten pound sledge hammer to it (well fed) is or is not a problem? Is this one of those "and then a miracle occurred" scenarios where I enter some sort of a balancing transaction at the end of the year to even things out?

Or maybe I misunderstood. Is QB smart enough to know that the item I am destroying was built three years ago at a different cost? I don't see a place to keep track of serial numbers.

Maybe this is more of an Accounting-101 question in the end. What happens to inventory items from year to year. As time goes by you make more. Some sell, some fall pray to five-year-olds run a muck with power tools and artillery. Is there some sort of a year-end procedure that balances things out so that if an item made three years ago is discarded today the reflected loss of that item will balance out in the end?
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Martin
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Q: How can I setup Quickbooks to carry a 1.5 trillion dollar loss every year and stay in business?
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  #6  
Old 10-01-2010, 08:25 AM
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lisa_mn lisa_mn is offline
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QB is always calculating average cost. So if your widget from 3 years ago cost $10 and since then the widgets have been costing $15, when you trash the widget now, it's going to be at the cumulative average cost of the widget, somehwere in between 10 and 15, depending on how many $10 ones you had and how many $15 ones you had.

Most companies take a physical count at the end of their fiscal year and make inventory adjustments so that at least once a year, the QB balances reflect what's really on hand.

You might want to keep the weapons and tools away from the bambino!
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  #7  
Old 10-01-2010, 02:59 PM
martin05rc martin05rc is offline
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Quote:
Originally Posted by lisa_mn View Post
QB is always calculating average cost. So if your widget from 3 years ago cost $10 and since then the widgets have been costing $15, when you trash the widget now, it's going to be at the cumulative average cost of the widget, somehwere in between 10 and 15, depending on how many $10 ones you had and how many $15 ones you had.

Most companies take a physical count at the end of their fiscal year and make inventory adjustments so that at least once a year, the QB balances reflect what's really on hand.

You might want to keep the weapons and tools away from the bambino!
OK, I guess my mental hang-up is that the widget in question (used for R&D and ultimately damaged beyond repair many years later) came from a batch three years ago. What you are saying is that this widget was accounted for back then and, for the purpose of the loss, the only thing that matters is the current average cost. If that's the case, I get it.
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Small Electronics Manufacturer
Los Angeles, Peoples Republic of California
Quickbooks Premier 2010 Manufacturing Edition

Q: How can I setup Quickbooks to carry a 1.5 trillion dollar loss every year and stay in business?
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  #8  
Old 10-03-2010, 06:14 AM
RobJoy RobJoy is offline
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Yes, you get it.

Thing is, average cost is the average of the quantity on hand, so reducing the quantity on hand affects the future calculation.
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  #9  
Old 10-04-2010, 12:45 AM
Joe Williams Joe Williams is offline
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Also, be sure that the item use was accounted for in year it was removed from inventory for use in R&D. It it was then the only thing for you to worry about entering is the amount you get from the gold, or you just don't tell Uncle about it!!!
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  #10  
Old 05-18-2011, 02:37 AM
cocolala cocolala is offline
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My supplier is calling back some products and will give a replacement, what should I do for the below situations:

1. I need to recall back items which I have consigned to retailers. I used Sales Order to record the products that I consigned out. How should I record the returned products?

2. One of the items is in a package, means 3 items in a package but only 1 of them needs to be returned and replaced. It is not an assembly item. In this case, how should I record the return?

PS: Once I get the quantity of the products, supplier will send us the replacement with no charge.
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  #11  
Old 05-18-2011, 04:01 AM
RobJoy RobJoy is offline
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If I understand you correctly, you have not invoiced any of these items, they only appear on the sales order. So QB hasn't 'accounted' for them really.

I would think your best course is to simply insert a comment line in the relevant sales orders: like "2 widgets recalled and replaced" immediately after the lines concerned. In the end you'll be invoicing the original items, in effect, so you just need something to tell you what happened.
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  #12  
Old 05-18-2011, 04:13 AM
cocolala cocolala is offline
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Quote:
Originally Posted by RobJoy View Post
If I understand you correctly, you have not invoiced any of these items, they only appear on the sales order. So QB hasn't 'accounted' for them really.

I would think your best course is to simply insert a comment line in the relevant sales orders: like "2 widgets recalled and replaced" immediately after the lines concerned. In the end you'll be invoicing the original items, in effect, so you just need something to tell you what happened.
Thanks for your reply.

In this case, I don't need to issue another Delivery Order (using Sales Order form) to my consignee?

And how about when my supplier send me the replacement stock? I receive item and the quantity would become more if i don record the called back qty as 'damaged stock'.
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