QuickBooks Online: Cost of Goods Sold (Inventory Items, Landed Costs, and Journal Entries)

[@phillipforde2453]

Hello Hector from West Palm Beach. Thanks for your videos. They are amazing

[@staralley1]

This is a SUPER VALUABLE webinar. Thank you for your help.

[@barryabrams6071]

Cost of Goods Sold (COGS) - How do you set this up for a Catering Company NOT a Restaurant and determine what should be included. The problem I am having is I need the info for the Schedule C of IRS Form 1040 Profit or Loss From Business. KZbin and Internet explanations focus on restaurants not catering. The ingredients is not bought until the customer has paid the invoice. All ingredients purchased for the event is used for the event. There is no need to do inventory for ingredients. Since we operate out of a shared kitchen, the only inventory might be things like chafing dishes, warmer bags, etc.

[@HectorGarciaCPA]

Everything goes to COGS, no need to inventory any of the food purchase and consumables Plates, warmers, utensils, and equipment that lasts more than year could be a Fixed Asset (what you are referring to “inventory”)

[@lindahamori1761]

Thank you Hector! Question please. If doing Full Inventory and creating a purchase order with multiple currencies from different suppliers : Does the purchase cost of the inventory item be in the currency of your company converted to say USD$ ? Note the Bill that comes in from the supplier in their currency is matched with the bank transaction in the converted currency we paid

[@HectorGarciaCPA]

Matching a USD bank payment to pay a EUR bill gets tricky for sure

[@MrAnjuubaba]

Great video, finally someone explaining different methods for inventory and how to adjust inventory What is the best method for a restaurant where we purchase mostly ingredients and sell different products like burgers, different dishes I believe that products should be non inventory items which are our purchases and we can adjust inventory by recording journal entry like you explained in the last method. Is it good for restaurants to create products as inventory items then adjusting inventory items at month end

[@HectorGarciaCPA]

For restaurantes, they shouldn’t track inventory in QuickBooks

[@MrAnjuubaba]

@@HectorGarciaCPA thank u so much for prompt response, really appreciated

[@p1sawhney]

Still unsure about how to logically understand setting starting inventory on hand at 0. QBO was instituted by the business I work for after there was already inventory for the product, that I want to track inventory for. I agree though that this feature proves problematic. Any further explanation on this issue would be appreciated.

[@HectorGarciaCPA]

Start with zero if the beginning balance is zero, which all startups are. If you have beg. Balances then don’t start with zero

[@p1sawhney]

Thanks. The inventory amount gets adjusted by QBO based on the sales receipt info, once that is generated?

[@sidneytornio6017]

Do you have any info on the best way to track byproducts of an inventory item?

[@cjwilson81]

I have a new client that does Botox injections. They also sell products as well. It is my understanding that I will only do COGS for the products that they sell and not for the actual injection services; however, the Botox that goes into the injection should be COGS, correct? If a customer comes in to get a Botox injection and I create a Sales Receipt that shows up in Sales on the Profit & Loss, how will the actual Botox product be removed from inventory?

[@fmchili4814]

Hi Hector, nice video. We sell items in small unit and big unit. In other words, there is 10 inner boxes (10 small units) and equal to 1 outer carton (big unit). Anyway QBOL can track ?

[@ConniePretula]

Great video Hector, thank you for sharing your knowledge. Do you have a video on changing the Sales Price/Rate on inventory? I'm assuming I go into the Products and Services page and Edit the Sales Price/Rate of that item? My suppliers have increased their pricing and I want to pass this on to my clients. I use the full inventory method and do my invoicing from QBO as well.

[@HectorGarciaCPA]

I have a tough time using the built-in tools for that, so i use tools like transaction pro importer or SaasAnt for imoorting spreadsheets with updated price. Look into those

[@ConniePretula]

@@HectorGarciaCPA thank you!

[@garyksung]

Hey Hector, thanks for the video on how to distribute shipping cost to figure out landed cost. However, when i divided my shipping cost by inventory, i get a rounded number, which does exactly match up to the bill. For example, my shipping cost from DHL is 707.08. and my number of boxes is 288. so it comes out to 2.455138. If i just add 2.45 or 2.46 to the rate, it will sum up to an amount that is slightly off from the Bill. how would I handle this?

[@HectorGarciaCPA]

You will have a small Margin of error.. it’s normal.

[@garyksung]

@@HectorGarciaCPA so the margin of error comes out to $1.48 for the bill for the 288 boxes, and over the year, this could add up because we'll be selling quite a bit of of boxes. how would i balance or clear this out? thank you so much for your input on this!

[@HectorGarciaCPA]

@@garyksung journal entry against COGS

[@tomaszmachura1422]

Seems like only the first option is viable if you want to automate your workflow. That's what I'm using. Thanks. On a side note, is it possible the register a pre-payment for a PO without adding the bill? My use case is that I need to prepay 30% of goods 3 months before production so obviously I have no bill yet, but even if I had, I don't want to receive the goods. I'm not sure how to register the payment for the 30% of the PO as pre-payment (not receiving goods)

[@HectorGarciaCPA]

You dont need to use a bill.. you can write a check or expense to accounts Payable directly

[@tomaszmachura1422]

@@HectorGarciaCPA oh OK makes sense thanks !

[@rockjefferies362]

Freaking Hector! Great video! I've been struggling to understand this.. Thank you

[@Ameer-u7c]

If QBO is connected to POS then how you can manage cost of item. let's suppose you have Product A 10 units @ $12 and when you buy next 10 units @ $14. How QBO change the price?

[@HectorGarciaCPA]

You might need to enter COGS entries as separate journal entries

[@lilylopez8925]

HI Hector, thank you for such a valuable information on your videos , If a have a POS system that tracks mostly everything except expenses, what would be the best way of combining this system with Quickbooks ? Thank you.

[@HectorGarciaCPA]

complex question... generally you would do a daily journal entry to enter the activities from the POS

[@lilylopez8925]

@@HectorGarciaCPA THANK YOU SO MUCH! I'm new in Quickbooks and barely finding my ways around it . I really think your video trainings are the best !!! Thanks for all you do , God bless!

[@carissaparfet4986]

Hi Hector! After I import my inventory to QuickBooks online and leave OH inventory at 0, what screen would I adjust my inventory in after import? Thanks!!

[@HectorGarciaCPA]

In the NEW button, there is an option for Inventory Adjustments

[@carissaparfet4986]

@@HectorGarciaCPA thank you! In the recent past I had a mess on my hands...I adjusted my inventory when it sold to 0 and my inventory shrinkage went through the roof

[@Jlarroyo7]

Hector! Are you located in the US?

[@boostedperformance6276]

Hi Hector, thanks for the helpful videos! I am a new user to QBO (originally a desktop user) With landed costs how would this work with foreign currency? I have foreign currency enabled, my supplier bill is in foreign currency, but my shipping and customs charges are billed in my local currency so I am not able to put them as a negative value on the supplier bill. Also when I calculate my landed costs in a spreadsheet the total is in my local currency so I can't add it to the line items on the supplier bill. Can you help? Thank you

[@HectorGarciaCPA]

You would need to convert to home currency for the purposes of doing the workaround for landed cost

[@boostedperformance6276]

@@HectorGarciaCPA Thank you for your reply. So you mean enter the supplier bill in home currency and manually calculate the item prices from foreign currency instead of using the built in foreign currency feature of QBO?

[@HectorGarciaCPA]

@@boostedperformance6276 no supplier bill goes in its natural state. Within the context of this video, i am saying that when you calculate the landed costs, do it based on the home currency equivalent

[@boostedperformance6276]

​​@@HectorGarciaCPAHi Hector, sorry but I am still having problems with this. My home currency is GBP. Shipping and import charges also GBP. Supplier bill is JPY. In your video you use the supplier bill to include the negative balance of shipping and import charges. My supplier bill is in JPY so it won't let me enter the GBP amounts. That's the part I am not understanding.

[@HectorGarciaCPA]

@@boostedperformance6276 you might need 1 on 1 support with an accountant

[@LivingDreamz83]

I signed up for qbo plus a year after using the basic qbo. Because the basic didnt have inventory and purchase order features, its not showing my cogs for last year. Is there a work around? I wonder if i can create purchase orders from last year and if qbo will account for those cogs...🤔

[@HectorGarciaCPA]

Purchase orders do not post to COGS

[@LivingDreamz83]

@@HectorGarciaCPA Ooooh, 😒 is there anyway to account for those COGS? If not, my reports will be forever incorrect

[@HectorGarciaCPA]

@@LivingDreamz83 well, for historical info; that’s more complicated, you would need to enter the actual bills. For moving forward, just know that a PO is not COGS because POs don’t post , you would need to enter the bill or the expense for it to post into the books

[@LivingDreamz83]

@@HectorGarciaCPA thank you. Thats what i was considering doing to account for 2020 COGS, entering the bills or doing a journal entry like you talked about at the end of this video. Thanks again

[@hikokibookstore9076]

please help me. why my qty in hand (inventory) not reduce accordingly after I has make a payment of invoice? Its should be decreases right after invoice payment. please help, i'm stuck this part to continue QBO. Thanks.

[@HectorGarciaCPA]

No, the inventory is moved with the invoice.. not the payment

[@lindag5076]

The Free 30 day trial, is this like the demo or do you actually use your own company info? I have a demo, SO different than desktop when I’m using the demo. It buffers a lot ( no internet) only WiFi and Hughesnet, is that normal?

[@HectorGarciaCPA]

you can use your own, VERY different than Desktop.. and you need to have a stable interest access

[@LivingDreamz83]

Hi its me again lol. For the first time i used the purchase order feature. When my inventory arrived, i created a bill by linking the bank transaction to the exisiting PO. My inventory was added correctly and all was good. But then i ran a P&L and noticed that the added inventory is being reflected as COGS. I thought COGS would only show when i sell the inventory..? Any suggestions?

[@HectorGarciaCPA]

Are the items inventory items? Or non inventory items?

[@LivingDreamz83]

@@HectorGarciaCPA inventory. I think i got it... on the bill, i did not choose a category detail, so i went back in and chose the COGS option. So i guess this category detail on the bill is supposed to match the product/service expense account

[@HectorGarciaCPA]

@@LivingDreamz83 yeap

[@LivingDreamz83]

@@HectorGarciaCPA idk, somethings not right because those inventory expenses are still on my p&L when i run it as cash..??? When ran as accural the p&l is correct. Im going to have to get a professional to log in because i cant figure it out

[@morehan8303]

Does anybody know which version of QB Online (Pro or Advanced) is used in this video?

[@HectorGarciaCPA]

pro

[@HectorGarciaCPA]

Pro

[@morehan9263]

@@HectorGarciaCPA Thanks for the quick response. I think we both meant Plus. Correct me if I’m wrong?

[@allwood4256]

how to record it Qb desktop landed cost when using different inventory software? what is your email

[@HectorGarciaCPA]

I only know QuickBooks.