Buying Inventory Bookkeeping Question

Buying Inventory

If I took a loan to buy inventory would that go to fixed asset or short term liability?

Inventory

by Susan
(Spokane)

How is an inventory reduction booked. If you had 4 items included in your inventory and when you do a physical inventory they are not there, how is the loss booked?

Thank you for your question.

I believe you can book the change in inventory to an Inventory Adjustments Account which would be a subcategory of Cost of Goods Sold and will show on your current Profit and Loss Statement.

The 4 items would originally be shown as a debit in the Inventory Account (Asset), so when you post the loss, you would credit the Inventory Account and Debit the Inventory Adjustments Account (COGS).

Inventory

I am doing the bookkeeping for a lactation consultant. She just started renting breast pumps from another company and is re-renting them to her clients. She also sells certain pump parts to be used with the pump. I am assuming the parts she sells should be included as inventory. What about the pumps that she is "subletting" (for lack of a better term)? If she does not own the pumps to begin with, I am thinking they should not be included as inventory. How do I account for them? Do I show her rental cost as "equipment rental expense" and just record "rental income" from her clients with the offset to cash or accounts receivable?

Inventory

by Tonya
(Panama City, FL)

My husband just started an Air Conditioning contractor business. A customer calls up saying their air is not working. He goes to their home and either repairs it by putting on new parts or completely installs a new system. He writes a ticket for the cost of labor plus any major parts he used at a marked up price. He bought a lot of parts and supplies to keep on his van in case he needs them, to save a trip to the supply house. I am really confused about the inventory tracking process. I know that when the bigger items are invoiced to a customer then I move those items to COGS, but what about the items that are not invoiced, such as zip ties, wire nuts, washers. Do I need to enter EACH individual item as it is used? He bought a pack of zip ties that were 1000 ties for $20. How do I track that? When they say COGS is items that you resale, does that INCLUDE things like zip ties, washers, etc? Also, he bought some thermostat wire and said he was only going to include it on the invoice if he uses a lot of it. Can he do that? How do I move the rest of it to COGS?

I currently use Peachtree software because it came with my textbook but am thinking of switching to quickbooks because there is a lot more help out there for quickbooks users.

Thanks for your time.

Tonya

outdated inventory

by Nell
(Surrey, BC Canada)

My husband sells cookies to grocery stores. The product (cookies) are bought by us from the manufacturer and then sold to the grocery stores.

If the product becomes damaged or outdated he gives the store a credit. In my books this is entered as AR cr and Sales dr. I am wondering if I can expense the our cost of returned product because it can not be resold. If I can then is the entry Inventory cr and damaged product dr?

thank you

Nell

Hi Nell,

I believe you can expense the outdated goods by debiting a Damaged Products expense account.

Or, you can also debit Returns and Allowances as a subaccount of Sales.

The end result should be the same either way.

Thank you for your question.

Reimbursing Employees for Buying Inventory

by Saunders
(Newark de )

If I pay an employee in his paycheck for items he purchased for the company how do I put the bill into the books and then not have the accts payable still open b/c employee paid?

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