Why are you treating these items as inventory if you are providing a service? Inventory consists of goods you own that are held for sale or production. If goods come to you just to be powder coated, you would normally not own them. They would belong to the customer who is buying your service.
None of the items that your customers bring for powder coating ever belong to your business so can never be an inventory item. Inventory items are assets that you purchased and belong to your business. So if you make these customer items part of your businesss inventory then the tax authorities will assume you own them and would like to know how you purchased them.
You purchase materials such paints and chemicals and these best could be created as inventory items .
You should just create a Sales invoice or if the customer pays on receiving the powdered items back a Receipt where you add line items for each chemical and paint used from inventory and for the service costs you charge.
You issue seems to be that you also want to register and trace the items brought to your business by your customers and want try to use accounting software for this rather than some logistical software or different system.
Assume you would have a car-wash business, one part would deal with customer reservations, receiving of their cars for washing service (no customer’s car will belong to that business) and the other part with providing the actual service which is washing the car whereby soap, water and labour was used.
Thus only a small part of this is important for accounting and that are the financial transactions that affect the business, so there is the Profit and Loss side of things where you record the income and costs/expenses eventually leading to a net profit (or loss) and the Balance side of things where you register what your own (assets) and owe (liabilities) and residual value of the business (equity). If the business stocks soap and want to track its use then it will be purchased as an inventory item, the water used may just be part of the general utility expenses and thus included in the carwash service costs.
All other aspects of running the business, the customer relations, the car-booking system, etc. are dealt in other ways be it software, handwritten or no system at all. Some software (ERP) does incorporate more functionality than accounting and finance only that help run businesses but Manager is solely for business accounting.
Use Journal Entry to record the received Qty of the customer. These are consigned goods.
It is Ok to record the Qty only.
Then you can issue it to the production order.
It will give you the qty in the production order and its costs will be zero.
Then you can issue the remaining qty of your inventory of paint and coating materials.
I am doing the same here.
I have created a separate code for the goods that we receive it for service purposes.
Consigned Goods (CG00001) and so on.
I must take exception, @AhmedAtia. The items @Muffi_Zainu receives for powder coating are not consigned goods. Consigned goods are items a business takes in, but never owns, and offers for sale on behalf of another entity. The consignee sells the item and charges the consignor a commission for having made the sale.
The items to be powder coated are no more consigned goods than a car left with a mechanic for an oil change. The owner of the car certainly does not expect the mechanic to sell the car, but only to provide a service. In providing that service, there may be expenses in addition to labor, such as for oil and a filter. Such items can be treated as inventory or simply as consumable supplies to be expensed. The question of whether to treat the powder coating materials as inventory depends on several factors, including their cost, their consumption or turnover rate, their shelf life, and whether they are purchased for specific powder coating jobs or are just kept for use as needed. Think of a carpenter. He does not treat a box of nails as inventory, even if he purchases lots of nails. The nails do end up in the finished product—perhaps a fence—but they are not tracked, counted, and figured into production orders. The carpenter just buys more when the box is nearly empty.
Accordingly, no journal entry should be made, even a zero-cost one. And no production order should be issued. A production order records the manufacture and addition to inventory of a finished inventory item. In the situation described, the powder-coated item is not a finished inventory item because it does not belong to @Muffi_Zainu’s business. And it will not be sold, but will be returned to its owner, who has simply purchased powder coating services (and possibly been charged separately for materials).
Both you and @Muffi_Zainu are making this much more complex than it needs to be. @eko is right. There are often things that need to be tracked but are not part of accounting.
That something can be done, doesn’t mean it is the right way or should be done by that application. For example Word has a table function with some limited spreadsheet capability (totals) but I would merely use it to present tables that may have been based on complex calculations in Excel or use the paste Excel in Word function. Similarly you could use Excel to write a business letter, but should you?
If you search for powder coating business software you will find lots of options, and similar to many ERPs these emphasise Customer (and Suppiier) relations, invoicing and tracking. They are poor for book-keeping and accounting purposes but excellent for business operations. Using the right tools for the right job saves time, errors, stress and eventually money.
I am not sure how you can say that. Your records will record the receipt of inventory that you never purchased and do not own. That is almost sure to raise questions with the tax authority. If it does not, it should. You also did not address how you record the disposition of the resulting finished goods to clear your inventory. But that, too, will raise concerns, because the government will want its share of a taxable supply. The argument that everything you sell has a zero cost is unlikely to be persuasive. You also face the issue of (within your accounting records) holding valuable inventory you claim has no cost. All these things are common warning signs of fraud for authorities. The fact that balances work out correctly in the end may not be a defense. You will have less potential for trouble, as well as less work in Manager, if you follow proper accounting practices—no journal entries, no production orders, no zero-value lines on sales invoices, etc.