What are the Inventory Accounting Entries?

Acctivate creates entries each time you purchase, receive, adjust quantity, sell or process landed cost for inventoried items.

Acctivate QuickBooks Inventory Software creates entries each time you purchase, receive, adjust quantity, sell or process landed cost for inventoried items. Here are some example journal entries created by Acctivate followed by an overview of transactions.

Account DR CR
Inventory Asset $750  
Accrued Purchase Receipts   $750
Inventory Receipt of goods, with or without a Purchase Order

 

Inventory Adjustment $50  
Inventory Asset   $50
Inventory Adjustment for inventory that was broken in the warehouse

 

Inventory Asset - TO Warehouse $50  
Inventory Asset - FROM Warehouse   $50
Inventory Transfer for inventory moving between warehouses

 

Inventory Asset - Finished Good Warehouse $50  
Inventory Asset - Raw Material Warehouse   $45
Non-inventoried Cost Offset Account - Labor Warehouse   $5
Inventory Assembly to build a finished good out of raw materials, including Labor

 

Gain/Loss on Inventory $250  
Inventory Asset   $250
Gain or Loss on Inventory due to an Inventory Balance Adjustment

 

Accrued Purchase Receipts $750  
Expense Account(s) for Other Amounts $50  
Accounts Payable   $800
Vendor Purchase Invoice (Vendor Bill) for Inventory and Other Amounts

 

Accounts Receivable $150  
Sales - Widgets   $100
Sales - Gadgets   $50
Customer Sales Invoice for Products and/or Services

 

Cost of Goods Sold - Widgets $50  
Cost of Goods Sold - Gadgets $25  
Inventory Asset   $75
Cost of Goods Sold (COGS) from Sales Invoice above

 

Inventory Asset $150  
Accrued Landed Cost   $150
Landed Cost allocation for Inventory Receipts, Transfers, Assemblies, etc

 

Accrued Landed Cost $150  
Accounts Payable   $150
Landed Cost Purchase Invoice (Vendor Bill) from the vendor for freight charges from previous transaction.

 

                                                                Sales Invoice
Transaction Type Debit Account Credit Account Note
Release Invoice Accounts Receivable based on Branch selection Sales Income  
Journal for Inventoried Products Cost of Goods Sold Inventory  
Journal for Non-inventoried Products     Taken care of by entry of vendor invoices unless using non-inventoried cost offset accounts in Warehouse
Journal for Non-standard Products     Taken care of by entry of vendor invoice

 

                                                              Purchase Invoice
Transaction Type Debit Account Credit Account Note
Inventoried Products Accrued Purchase Receipts (Purchase account on WH) Accounts Payable  
Non-inventoried Products Cost of Goods Sold Accounts Payable COGS account selected based on Product Class or other group for Sales/COGS setup
Non-standard Products Expense Account Selected Accounts Payable User manually selects the GL Expense account on the PO Invoice
Other Amounts (not Landed Cost) Expense Account Selected Accounts Payable User manually selects the GL Expense account on the Other Amounts tab
Other Amounts for Landed Cost Accrued Landed Cost Accounts Payable Only when Landed Cost is included on Vendor Bill

 

                                                            Drop Ship Wizard
Transaction Type Debit Account Credit Account Note
Sales Order Release for invoicing Accounts Receivable Sales Income  
Purchase Invoice Cost of Goods Sold Accounts Payable COGS account selected based on Product Class or other groups for Sales/COGS setup

 

                                                          Inventory Transactions
Transaction Type Debit Account Credit Account Note
Issue Expense Account Entered Inventory Default can be set on Warehouse
Receipts Inventory Accrued Purchase Receipts With or without a Purchase Order
Landed Cost Inventory Accrued Landed Cost  
Adjustment/Count Inventory Adjustment Account Inventory  Depends on positive or negative amounts
Balance Adjustment Gain/Loss Account Inventory Depends on positive or negative amounts