Accounting for "non-inventory Parts" ??

This is probably more of an accounting question than a QB question... but maybe one of you guys will be kind enough to offer some advice... since I am not an accountant.

It looks like that when we sell a "non-inventory part" QuickBooks doesn't Credit Sales...

My question... How can we get a credit in sales when we sell a "non-inventory part" using Quickbooks?

Here is the accounting I see in QB...

First - INVENTORY ITEM:

Sale: Debit AR Credit Sales Credit Inv Debit COGS Pmt Credit AR Debit Un-Deposited Funds Deposit: Debit Checking Credit Un-Deposited Funds

Next - NON-INVENTORY PART:

Sale: Debit AR Credit COGS Pmt Credit AR Debit Un-Deposited Funds Deposit: Debit Checking Credit Un-Deposited Funds

So, where does Sales get a Credit when we sell a Non-Inventory Part?

thanks for any help.

Will

Reply to
Will
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The problem is simple. Only inventory parts have places in them for both expense and revenue accounts. Non-inventory parts can either be an expense or a revenue, not both. You need two items, one for use on PO's and the other for use on Invoices. That's the reason they are non-inventory.

Reply to
Golden California Girls

GCG,

Thank you for your help... even though I'm not sure what two items to set up and what accounts to allocate them to. I'll think about it and maybe figgure it out... but maybe you would be kind enough to give me just a little more info... as I am courious about the case for "non-inventory items" when we must purchase them before we sell them.

Note, in the QB 2004 manual on page 150 they instruct us... "You can set up items that are not inventory items for things you purchase, things you sell, or both. Quickbooks calls such non-inventory parts."

In our case we finally realized that we do not actually buy these 'non-inventory items' - someone makes them, sells them and sends us a check for our share. We must track these sales to match some inventory products however as royalties are due on both.... meaning we may sell Item A from inventory or Item A may be sold by a 2nd party and never go through our Inventory system... but in either case, we owy the royalty on Item A.

Accountiing for Items that go through Inventory has already been setup.

For Items that do not go through our inventory we did it this way...

Create a non-inventory part and identify the 'account' as Sales.

Now when we get a check from the 2nd party who sold the item the accounting looks like this...

Sale: Debit AR Credit Sales Pmt Credit AR Debit Un-Deposited Funds Deposit: Debit Checking Credit Un-Deposited Funds

But, if we ever come up with the case in the QB manual... I guess we need to employ your solution and setup two "Items"

If you would care to explain what two items and what accounts should be associated with it I will file it away for future use.

Now that I think about it, would you possibly do it this way...

1 - Set up a Non-Inventory Item with the Account identified as Sales (This one is for when we sell the Item) 2 - Set up another Non-Inventory Item with the Account identified as What ??? (This one is for when we buy the Item)

If I setup the 2nd account as "Non Inventory Items" and made it "other current assets" then that is the same as Inventory and I would also have to do a journal entry to move it from that account to COGS.

If I set it up as "Non Inventory Items" and made it an "Expense" account then COGS would be distorted.

So, CA Girls, I still need your help.

Thanks - Will

Reply to
Will

This is NOT true. Discounts, payments, groups, assemblies and subtotals cannot be linked to 2 accounts. Other items CAN.

For a non-inventory item, select "This item is purchased for a specific customer".

For a service item, select "This service is performed by a subcontractor".

For an Other Charge, select "This is a reimbursable charge".

Reply to
!-!

The difference between inventory and non-inventory parts is only on the cost side.

Inventory parts are debited to Inventory Asset when they are purchased, and when they are sold (by an invoice or sales receipt), they are credited to Inventory Asset and debited to Cost of Goods Sold at average cost. QB completes this accounting automatically in background.

Non-inventory parts are debited directly to Cost of Goods Sold and are not included automatically in Inventory Asset.

The credit for the purchase event is usually Accounts Payable or Bank, depending on the method of purchase.

The sales transaction is always Debit Accounts Receivable/Bank and credit Sales in both cases. Only in the case of the inventory parts is a background entry made transferring the stock to cost of goods sold.

Bob Williams

Reply to
Bob Williams

No, see !-!'s response. I have several clients who sell both types of items and I use the method described by !-!. You just have to check that little box to get the screen to provide the option to assign cost & sales accounts.

Reply to
Tee

What another question?

Reply to
Allan Martin

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