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How to handle QuickBooks inventory when sending materials to a vendor for assembly
by
CIAS QuickBooks
If you send materials to another company for processing or assembly, such as adding a logo or other art to a product, assembling the individual parts to create an item, or painting an item, then you may need to track those materials and items for financial reporting. Even though the items are being provided to someone outside of your company, they are resources that you own, and remain part of your inventory (ownership does not transfer) and does not reduce your inventory or any Balance Sheet Accounts, as they are just being temporarily moved to another location and returned to your company at some point.
Typically, when you build assemblies in one of the QuickBooks solutions, your QuickBooks inventory is reduced for the items used in the assembly and increased for the number of Assembly Items available for sale. If you send your individual parts to an outside company to assemble, then even though you own those parts and the items, you don t necessarily have the items on hand and do not have an accurate count of items that are available for sale or available for use in other assemblies. To track this in the QuickBooks software, you can:
1. Build the assembly.
2. Click Edit, then change the building to pending.
3. Use the Stock Status by Item report to see how many items are reserved for pending builds.
4. Use the Pending Builds report to see how many completed assemblies are due.
5. When you receive the completed assembly back from your vendor, open the build and remove the pending status.
6. The inventory parts are then received and the assemblies are added to your QuickBooks inventory.
This approach is fairly simple, however remember that QuickBooks for accounting does not prevent you from using parts involved in a pending build. This means that:
the QuickBooks software will not prevent you from selling the individual items as they are still on-hand but not available
the QuickBooks software will also not prevent you from creating another assembly build from those parts.
To include the cost of processing or finishing in your QuickBooks inventory tracking, you can:
1. Create a Service Item for the cost of the processing/finishing.
2. Include the service item in a Build Assembly.
3. Create a Pending Build, as described above, for reporting purposes.
4. Enter a bill for the cost of sending the items to the vendor for processing/finishing. Use the items tab on the bill and the service item created in step 1.
5. Select Edit > Mark Build as final to mark the build as final.
This method allows you to include the cost of the processing or finishing in the final item so that the average cost used when the item is sold accurately reflects all the costs involved in making and finishing the item.
CIAS QuickBooks
offers a full range of business accounting services. We specialize in set-up, clean-up, and disaster recovery of accounting software systems. Whether you need assistance with the best accounting software QuickBooks (QuickBooks recovery or other QuickBooks services) we are the optimum choice.We are at your disposal if you have any other questions related to tracking inventory in QuickBooks.
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