PO, receiving & AP

[robocarroll]

I have created a PO and received the parts ordered.
When I go to enter the bill (invoice), there is shipping and tax in addition to the parts. How and where are tax and shipping amounts entered so that the check is correct? It doesn't seem to make sense to add non-inventory line items to the PO for tax and freight...

[Wartrace]

Just add the shipping and taxes under the expense tab and point them to a "shipping" COGS account and a "tax expense" COGS account. (This is how I would handle it however there are different ways)

There are a lot of opinions in accounting as to how to handle these additional costs. Some would argue they should be rolled into the item costs on a prorated basis because the true cost of bring the item into inventory includes the shipping and tax costs. If that is your philosophy you could pro-rate the costs, assign them to items on the item tab.

In my opinion the costs should be segregated in a separate COGS shipping/sales tax paid account which would allow you to produce reporting on these expenses and the items would reflect the prices charged by your vendor.

On a side note, why are you paying sales tax to your vendor? If you are reselling the product you should supply your resale certificate number so you can avoid paying sales tax.....