Inventory and Purchase Order Inventory Using Inventory in

Inventory and Purchase Order Inventory

Using Inventory in Quick. Books • Activate Inventory feature – Select Edit / Preferences – Click Purchases and Vendors/ Company Preferences – Click Inventory and Purchase Orders are active • • Inventory Items track inventory Purchase orders are used with inventory items Use Items tab in sales form for inventory items Uses weighted-average cost method 1/4/2022 Inventory 2

Inventory Accounts in Quick. Books • Inventory Asset – Tracks cost of each inventory item until sold – Increases when inventory items are purchased – Decrease when inventory items are sold • Cost of Goods sold – Tracks the cost of the inventory when sold – Subtracted from total sales on Profit & Loss report to show gross profit 1/4/2022 Inventory 3

Purchase Orders account • Quick. Books creates this account the first time you create a purchase order • This is a non-posting account that does not affect your balance sheet or income statement 1/4/2022 Inventory 4

Inventory Items • Items which need to be tracked separately for reports and inventory status • Need more data entry • Good for items purchased in bulk and sold in a short period at a marked up price 1/4/2022 Inventory 5

Non-inventory parts • These can include the following products and goods: – those purchased for a specific job and then charged for – those you sell but do not purchase – those you purchase but do not resell (for example, office supplies) – those you purchase and resell but do not track as inventory 1/4/2022 Inventory 6

Average Cost of Inventory • When an inventory item is purchased – Inventory Asset increased by the actual cost – The average cost of items is recalculated • When an inventory item is sold (invoice/cash sale) – Cost of Goods sold is increased and Inventory Asset is decreased by the average cost of the items sold 1/4/2022 Inventory 7

Example of Average Cost Ten 104 Slider (cost $300) in stock 10 x $300 = $3000 Buy 3 new at $325 3 x $325 = $975 Combined Inventory cost $3000 + $975 = $3975/ 13 = $305. 77 Average cost/unit 1/4/2022 Inventory 8

Invoicing For Inventory Items • Use Customers/ Create Invoices • Select Inventory items • Quick. Books automatically adjusts inventory on hand to reflect both the quantity and value in the Inventory Asset account 1/4/2022 Inventory 9

Using Purchase Orders for Inventory Items • To track inventory item purchases • To easily track items on order • To create reports to see what is on order, when it is due to arrive • To track open purchase orders which have partially received the items 1/4/2022 Inventory 10

Ordering non-inventory or service items using Purchase Order • you can include these types of items on the purchase order form: – Non-inventory Part – Service – Other Charge • Can track purchase order for items • These items are excluded from reports that show items on order • Important: – make sure you assign an expense account to the item – If you have Quick. Books Pro or Premier and sell the item you are ordering, set up the item so that it has both an income account for sales and an expense account for purchases. 1/4/2022 Inventory 11

Receiving Inventory • Issue a purchase order and later receive part or all of the order • Without the bill: – Receive Items – Enter Bill for Received Items • With the bill – Receive Items and Enter Bill • Write Checks or Enter Credit Card Charges when you pay for the items at the time of buying 1/4/2022 Inventory 12

Receiving Items • Vendors/ Receive Items • Quick. Books prompt with any open PO • Select open PO from the list, Quick. Books automatically fills in the item receipt • If receiving against more than one PO, create separate receipts for each PO • Override quantity received if receiving partial order 1/4/2022 Inventory 13

What happens when you create an Item receipt for Items on a PO? • Quick. Books increases your accounts payable by the amount shown on the item receipt • For each inventory item on the receipt, Quick. Books adjusts the quantity in stock (thereby increasing your inventory asset account), lowers your quantity on order, and recalculates your average cost for each item 1/4/2022 Inventory 14

Entering Bills for Received Items • Does not add another transaction since Item receipt is already recorded, just converts Item Receipt into a Bill • If necessary change the date shown on the bill 1/4/2022 Inventory 15

Steps to Enter Bill for received items • Vendors/ Enter Bill for Received Items • Select Vendor, Item receipts are displayed, bill received box checked • Select one receipt at a time, click OK • Bill is displayed • Complete Ref No, Terms and Memo • Enter any additional expenses • Recalculate if amount is different • Save 1/4/2022 Inventory 16

Entering additional expenses • Click the Expenses tab – For each expense, enter the amount and relevant expense account in the detail area of the Expenses tab • (Optional) You can use the Customer: Job column to track charges for a specific customer or job – Quick. Books automatically makes the expense reimbursable by the customer unless you click the small invoice icon to place an X through it • (Optional) You can use the Class column to assign an expense amount to a class 1/4/2022 Inventory 17

Recalculate • If the amount shown in the Amount Due field does not equal the total bill • Click Recalculate. Quick. Books then adds up all the amounts in the detail area and inserts their total in the Amount Due field. 1/4/2022 Inventory 18

Adding Freight Charges to Inventory Items • Add the freight charges to each inventory part item • Increase the total cost of items by the amount of the shipping • Increases average cost of each item • Method of proportionally adding freight-in charges to each inventory part is called Capitalizing freight-in 1/4/2022 Inventory 19

Receiving Item With a Bill • Vendors menu/ Receive Items and Enter Bill • From the Vendor dropdown list, choose a vendor or enter a new one and Select open purchase order • (Optional) Change the date of the bill, in the Amount Due field, enter the amount of the bill. • Complete the Ref No, Terms, and Memo fields as needed. • Click the Items tab. You can edit items that were entered from your purchase order and/or enter new items • Shipping charges or taxes not associated with any one item, use the Expenses tab • (Optional) Click Recalculate • Save the bill. 1/4/2022 Inventory 20

Adjusting Inventory • Each transaction for purchase or sale of an inventory item adjusts the inventory • May be adjusted manually – – – 1/4/2022 Select Vendors/ Inventory Activities Select Adjust Quantity/Value on Hand Use Inventory Variance account Enter new quantity or value Total value of adjustment is calculated using average cost method for new quantity Inventory 21

Reports • Inventory Item Quick Report – Select item in Item list – Select “Quick Report: …” from the Reports menu at the bottom of the item list • Stock Status by Item Report – Reports/ Inventory Stock Status by Item • Stock Status by Vendor Report – Reports/ Inventory Stock Status by Vendor • Valuation Detail Report – Reports/ Inventory Valuation detail 1/4/2022 Inventory 22

Not Available in Quick. Books • Tracking back orders for customers • Tracking multiple prices for any item • Does not differentiate between inventory of raw materials, goods in process or finished goods 1/4/2022 Inventory 23