I would like to know if there’s a way in accounting Cost of Goods Sold, so that the Inventory Item cost would include (item cost + shipping + import duty + clearing etc), while at the same time I can account the supplier, shipping company, customs service and clearing company separately.
If I account shipping, duty and clearing as expenses, this would not reflect correctly as the item cost in COGS.
But when I manually calculate COGS and enter the final item cost when entering inventory via Purchase Invoice, I cannot separately identify / pay to the suppier, freight company, customs service and clearing agent separately.
Just create expense accounts such as “Shipping”, “Import duty”, “Clearing” etc.
You should also setup multi-step income statement (under Settings tab) so you can have section called “Cost of Goods Sold” where you can group all these expense accounts which represent direct costs.
Once you use multi-step income statement, you will be able to see your income, direct expenses, gross profit, indirect expenses, operating profit, other income/expenses, net profit etc. It’s really up to you how you want it organized but the segmentation above is the most commonly used standard.
In this case, how should I proceed with receiving a shipment? After entering invoice values do I enter the shipping and other related costs as separate lines to the PI? And would it automatically calculate the correct COGS and set inventory price with all included?
All the figures/accounts are uncategorized.
You need to go to settings → Mulit-step Income Statement then categorize you’re accounts, put accounts into correct groups i.e Revenue, Direct expences, Operating expences.
Once categorized go to reports → Profit and loss statement click new statement set period and in Type dropdown click Multi-step then click Create.
Do you want to capitalize related costs? If so, instead of using expense accounts I suggested, you can allocate/spread the cost to specific inventory items.
What are those COS - .... accounts you have created? Do you want your inventory items when sold automatically debit these accounts? If so, that’s not currently possible. When you use inventory items, cost of goods sold amount will be always debited to single Inventory - purchases account. You can’t have multiple CoS accounts linked with inventory items.
However good news is there is a feature in pipleline called Control accounts which will allow you to create custom control accounts which can be then linked with specific inventory items.
Lubos,
The COS accounts is actually my version of COGS. Although it is setup correctly it does not show in the Profit/Loss Statement under Direct Expenses.
This is important, because it should determine the Gross Profit of items sold to items purchased.
With regards to the screenshots of the inventory items: -
The first screenshot shows what was purchased and it is correct according to what I have done.
The second screenshot shows the stock value are deducting correctly.
The third Screenshot “Inventory Quantity Movement” shows the following: -
Although I have purchased the Stock Items as per The first screenshot:
Carbon Dioxide 1500
It should show after selling
Purchases, Sales, Write-Off, Closing Balance
Carbon Dioxide 1500, 700, 800
It won’t be shown under P&L if those accounts have no balance. By end of this month, you will be able to specify for each inventory item CoGS account. Then these accounts will have balance and will be shown under your P&L.
Right now, if you are selling inventory, all CoGS transactions are posted to account Inventory - purchases.
I must say your software is very user friendly and has a lot of capabilities apart from certain issues I have and the support is good, because you are somebody else responds fairly quickly. (Better than another program programs like Turbo Cash.
They do have a balance, because the stock was purchased, Production orders were created to do the BOM and they were sold as final Items.
@lubos Thanks for the reply. Yes, tha’s what I’m asking, because COGS should include (Cost + Freight + Import Tax + Clearing Charges) right?
What I’m asking is how can I automatically capitalise all these expenses to the Inventory Item cost when I receive items through a Purchase Invoice.
Because, end of the day I would need to identify the costs I paid to the freight company, Customs authority and clearing agent to be seen separately? If I manually capitalise all these costs to the Inventory item, I would be paying to the supplier the total of his bill + freight charges + customs duty + clearing charges, which would again be wrong right?
So how do I do this via Manager i.e. associate all the COGS to Inventory Item and at the same time account it separately.
Instead of using expense account, categorize these costs under Inventory on hand account, then specify inventory item these costs relate to.
What you are doing here is essentially increasing your value of inventory on hand. When inventory it sold, the cost of the inventory sold will be transferred to Inventory - purchases expense account.
When you produce new inventory item using Production Orders tab, you are just converting one type of asset into another type of asset. It has nothing to do with expenses. Cost of goods sold is only calculated upon sale of inventory item (or inventory write-off)
This then does not make any sense, does it. I am not selling Inventory Items. I am selling a product made out of various Inventory Items.
How does the Computer Companies deal with this, because they are selling computers manufactured by the following Inventory Items: -
Mother Boards
Display Cards
CPU
Case
Ram
or Bakeries selling Bread mixed with the following products: -
Flour
Butter
Salt
Yeast
@lubos this is a very nice and easy program to use. If there was just a way to link the Inventory Items to the Final product in order to reflect as Direct Expenses.
I have done the following work-around and this was only a test to see whether it may work.: -
I purchased the stock Items from the Supplier
I created a production order from the Stock Items to create a final product
The production of the final product resulted in the Stock Items to reduce.
The problem now is to get the final product to reflect as Direct Expenses, because this transaction is not yet functional in Manager.
Therefore I made a Journal Entry to CT Inventory on hand with the cost price of the final product and DT COS - Recharge 1.0Kg DCP (My COGS account for the final Product)
This resulted in that the amount cost of the final product is now reflecting as a Direct Expense on the P/L Statement.
In order to get income, I created an Invoice for the sale of the final product, and the result is as follow: -
I am flattered to be included in your question, but you will notice I have not participated in this topic on the forum. I don’t use the inventory module, so I have nothing to offer. Sorry.
