Sales by Vendor

Here's what I do for an art gallery that gets artist consignments:

Items are entered as Inventory Part *but* they do not go to Inventory Asset account.

I have two liability accounts setup that offset each other:

Other Current Liability: Consignments " " ":Consignments:Due to Artist " " ":Consignments:Artwork

When entering a New Item:

COGS account = Due to Artist Inventory Asset = Artwork Income account = Sales:Consignments

Thought the background was necessary since, technically, you don't own consignments and don't want them counted as assets but do need to track them as liabilities because its something you owe to someone whether its the returned item of the cost of the item.

I just pull a Quick Report on Sales Consignments to see if there were any sales of consignment merchandise and, if so, the artists we need to pay. If you want more than that you could setup classes for those vendors you receive consignments from. Every line item that is a consignment item on an invoice or sales receipt can then be assigned the vendor in the class column. If you're worried about knowing which is consignment and which isn't you could preface your consignment item descriptions with Vendor Name Consignment.

Tara,

Thanks for the help, it works well. I just have two questions.

1. When I run the report "Sales Consignments" how do I make the vendor appear in the report?
2. As far as accounting goes, when I get billed by the vendor, can I just enter in bills as items? Or do I need to re-classify the associated accouts, such as "Inventory Assets"?

Tim

Tara,

Thanks for the help, it works well. I do have two questions.

1. How do I get the vendor name to show in the report "Sales Consignments"?
2. When entering this item for payment will the accounting be correct. Since we changed the COG account and inventory asset.

Tim

Tim, I'm very sorry, I totally screwed that up. Actually its what the accountant setup and its caused problems. She didn't want to change it preferring to make year end adjustments instead. However, the way it

Four new accounts:

1. sub account of Inventory Items called Consignment Inventory
2. Other Current Liability Account called Due to Consignment Vendor
3. sub account of COGS called Consignment Costs
4. sub account of Income or Sales called Consignment Sales

Setup your consignment Items like this:

"Consignment Item" (Inventory Part) COGS=COGS:Consignment Costs Income=Consignment Sales Inventory Asset=Consignment Inventory Enter Quantity

Unfortunately you now have to go into the other current asset account you setup (Consignment Inventory), double-click the Inv. Adj. entry showing the item you created, then change the Adjustment Account drop-down at the top of the window from Opening Balance Equity to Due to Consignment Vendor (Other Current Liability).

Now you'll see, in your Chart of Accounts:

Consignment Inventory = $ Due to Consignment Vendor = $

When you sell the item your Consignment Inventory will decrease by that amount. You then write a check to the vendor, assigning Due to Consignment Vendor as the expense account which will zero that out.

Basically its a PITA and thankfully my client who does this doesn't have a high turnover of consignment items. This problem has been wrestled with from an accounting perspective several times over the last two years. What you see above is the final "this is how it should work even though there's alot of steps involved." The accountant chose to ask me not to change from the previous setup due to the amount of work involved and prefers to just make adjustments at year-end. That's her preference but mine is to do it this way for accuracy.

Anyway, I'm very sorry to have misled you before. I have no excuse except that I gave you the procedure discussed most often by myself and an accountant.