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Two Quick Questions on Beginning and Ongoing Inventory

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  • Two Quick Questions on Beginning and Ongoing Inventory

    I have QB Premier Manufacturing & Wholesale 2014. My wife and I are starting an online retail sales business selling primarily on Amazon. We have a bunch of old inventory we are going to send in to start off but just have an estimate of what it is worth because we have bought for several months from thrift stores, yard sales, retail stores, etc. and dont have receipts for everything.

    First, I would like to enter that as a BULK starting inventory and not itemize everything. How do I do that?

    Second, I think we will do that each month or perhaps each "sourcing day"--entering just a "lot" amount of inventory bought that day or month without quantities and item specifics as we are keeping up with that in a separate program (Inventory Lab). How do we do this in QB M&W? Any suggestions or advice would be much appreciated!

  • #2
    Ok, what you are wanting to do is manage inventory using the periodic inventory system where you track value but not item count/cost.

    do not turn on inventory in preferences in desktop. QB inventory is perpetual and only works on item count and price per item purchased.

    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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    • #3
      Thanks Rustler

      So if I go with your preferred suggestion #1--if I have say $5,000 in inventory I want to start with that I already have sent in to Amazon--I could go ahead and post that to the asset account "Purchases" immediately, correct?

      Then, today if I buy $1,000 at Walmart to send in, I could add that as another "purchases" asset entry and at the end of the month, if I valued all this at $10,000, I would subtract $10,000 (sell price) from $6,000 (my cost) and to the journal entry/debit/credit per your recommendation?

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      • #4
        Originally posted by Sacajamo View Post
        So if I go with your preferred suggestion #1--if I have say $5,000 in inventory I want to start with that I already have sent in to Amazon--I could go ahead and post that to the asset account "Purchases" immediately, correct?
        Yes that is correct, and the offsetting entry would be to owner equity

        Then, today if I buy $1,000 at Walmart to send in, I could add that as another "purchases" asset entry and at the end of the month, if I valued all this at $10,000, I would subtract $10,000 (sell price) from $6,000 (my cost) and to the journal entry/debit/credit per your recommendation?
        No.
        When you sell the whole amount of the sale posts to income.

        then you do a journal entry for the cost of what you sold
        debit COGS $$$
        credit purchases $$$

        On the P&L income is reduced by expense to get taxable net profit

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