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  #1  
Old 05-10-2017, 05:48 PM
Bookkee Bookkee is offline
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Salvage Parts

I don't seem to see what I had posted earlier so forgive me if this is a duplicate. I am setting up a new company file in 2017 Enterprise Desktop version for a business that will buy and sell used parts. They will purchase old or wrecked equipment or vehicles and part them out to sell the individual component parts. What would be the best way to set up the items and is it possible to make sub items so that the parts can be traced back to the original unit purchased for parts. I am wondering if it will be near impossible to assign a cost to all the zillions of small parts. Any suggestions would be greatly appreciated.
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  #2  
Old 05-11-2017, 04:15 AM
Rustler Rustler is online now
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No, sub items are just used to organize the list,they are unique and have no other relationship to the parent.

Your business model is tough, I would not use inventory type items, you need to use the periodic inventory system

The issue is the cost of what you sell. You industry has an average mark up in your area, I would suggest you find out what it is and then set your business mark up a a %. When you sell a used part, I would do the math to find cost and use that as the cost of what was sold. Consistency goes a long way in an audit is my reasoning.

There are two ways to do periodic inventory, choose one and stick with it, you can not mix and match

1. (my preference) Create an asset account called purchases and post all purchases of item for resale to that account. Periodically, weekly, monthly, etc value the inventory on hand, subtract that value from the amount shown in the purchases account and do a journal entry for the answer to the subtraction
debit COGS for that value
credit purchases for that value

OR

2. Post all purchases to COGS. Periodically, but at least at the end of the year, you value the inventory on hand and do a journal entry.
debit the asset purchases account for that value
credit COGS for that value

Print the P&L
then reverse the journal entry
debit COGS for that same value
credit the asset purchases account for that value

This last journal entry, moves the value of what was on hand at the end of year back to COGS so the cost will be counted against the new year sales.
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Old 05-11-2017, 09:33 AM
Bookkee Bookkee is offline
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Very helpful - thanks so much!
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