To the point of adding my inventory now. All has been paid for with personal funds so far since this biz is new. I added a chair I purchased as an Inventory Item first. I then filed an Expense Claim since I used personal funds. It doesn’t show up the Billable Expenses, which is confusing. How do I actually transact paying for it so it will show up in Inventory On Hand in the Summary screen?
I need to understand this very well since I’ve collected a ton of items so far waiting for this biz to be formed and launched.
You can’t have both, Billable Expense and Inventory as there is only one chair. Based on your previous thread, you got reimbursed rather than sold it - so Billable Expense. In your expense claim did you use as the account Billable Expense or Inventory? Should be Billable Expense
I used the Inventory On Hand like the Guide said to do using an Expense Claim. I followed those steps but since I paid for it with personal funds I don’t know how to pay it against my equity for example. I want to capture the cost I paid now and not when its sold.
You would use Inventory on hand if you are going to sell it. Which Guide are you referring to? To transfer the expense claim to equity you use a Journal
@ksh, everything you said in your other topic suggested you were buying the chair for a client. That’s an appropriate use of Billable Expenses, in other words, things you are passing through to a customer. Inventory is for things you purchase (or manufacture) to hold in stock for later resale. While it’s possible to handle the chair you bought as an inventory item, it’s a lot of work. My guess is that as an interior designer you are never going to hold inventory for later sale. So I would not go through the extra work of accounting for things that way. But whatever you decide, it’s either inventory or a billable expense. You can’t mix them.
As I said in some of my other responses to you, expense claims are separate. They could be used to record either billable expenses or inventory purchases. The key factor is that you used your personal money, not a company account. But don’t confuse billable expenses with expense claims. The first is about who you are buying it for. The second is about where you got the money to buy it.
The first chair was purchased for client approval and then sold to them upon approval.
I understand that function within Manager perfectly now.
I am now to the point of entering all of the inventory I’ve been purchasing with personal funds prior to the start of this biz. It is an interior decorating biz that offers services and will have a small shop opening May 1 to sell furniture and accessories and curtains so I need to get this all entered and ready to sell.
I have 10 chairs, a desk, 3 bed frames, misc tables, a bookcase, etc. And many small accessories as well. They are all repurposed or repainted etc. So I not only need to account for their initial purchase but the misc hardware for repairs and the cost of paint and my time, but step one is to enter the items. I’ve got that part figured out.
The first chair I added shows up in the Summary Screen in the Inventory on hand and it also shows up under the Equity section in the Summary as a new Manager created Starting balance equity account, which makes sense.
What I’d like to do once I enter them is somehow tie the cost of them to Owner Equity as a credit to that account.
I guess my question(s) are: how do I account for the cost of the purchase now, or do I have to wait until it is sold? And then if I have to wait how do I do those transactions? And once an item is sold, I’m assuming it will clear out of Inventory on hand, but remain in the Starting balance equity account, and will show up in my Owner account? And then how do I clear out the Starting balance equity account at years end?
The guide I used to add the inventory item was the Manager Guide for Inventory Items.
Since this stuff is not being bought on behalf of a specific client, inventory is the way to handle it. I don’t use the inventory function in Manager, because my business is purely service, so I’m not the one to answer your questions. But I can tell you cost of inventory has to be separate from Owner's equity.
I suggest reading up on inventory accounting principles at http://www.accountingcoach.com and http://www.accountingtools.com. Once you’ve got a basic understanding of how inventory accounting works, including how to integrate it with manufacturing/production costs, then you can start looking at how Manager implements it.
Interesting that the cost of inventory has to be separate from Owner’s equity, because Manager automatically put it there as soon as I created the Inventory Item. I’m so confused now.
I found this online as well:
The credit is to capital, as the owner’s share of the business (owner’s equity) is increasing. The owner is using his own funds to buy more goods for the business, so he is effectively investing goods into the business. Regardless whether the investment is in the form of assets other than cash - this investment is still an investment and as usual is known as capital.
Your Owner's equity account was affected because Manager is a double-entry system. Speaking in general terms, the cost of inventory is a current asset. Asset accounts are increased by debits. They must be offset by corresponding credits. Your Owner's equity is an equity account and is increased by credits. Depending on the path you took through payments, expense claims, and journal entries to record the transactions related to acquiring the inventory, you may have a range of specific records involved with the inventory.
Understand the accounting equations: Assets = Liabilities + Equity. The two sides must balance. I don’t know what the quote you included referred to or where it came from, but it looks correct as far as it goes. It just isn’t the entire picture. I think that if you look closer, you will see that an inventory asset account went up at the same time equity did.
HI, im using the single user version of manager, my question is when does the inventory items get deducted from inventory list? (automatically) when i issue sales invoice? Delivery notes?
Yes - “(automatically) when i issue sales invoice”
alright, should i check also the Start date and sales invoice date?
Why do you ask that? The Sales Invoice date can’t be before the Start Date
Start Date is used only when migrating from another accounting system to Manager. See the Guide at Manager Guides.
Normally, what @Brucanna says is correct. But if you have unpaid accounts receivable when you migrate, you must enter those sales invoices to establish the opening balance of the Accounts receivable account. In that situation only, you must enter a sales invoice issue date before your Start Date. The same is true for purchase invoices.
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