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Since this is an item for resale, I would establish it as a line item in inventory. Part of cost of goods sold.
Then, when the order is billed, the shipping can be taken out, and invoiced, at a mark up or not.
You can set it up like purchases, if you use that. Or. set it up as a job cost if you bill that way. Then, every component of the order shows up as part of the job.
why would the freight portion be part of inventory?
because it's part of the purchase cost of inventory in a lot of businesses. Your auto repair station, when they order parts that are shipped in, include that cost in the purchase price for resale. Same theory.
I assume your customer orders custom fabrics, etc. for each customer job. Listing it as part of inventory (perpetual method) or purchases (periodic method) keeps track of the costs and allows you to reconcile when it's time to bill.
I would not use an expense account. Freight as an expense is for shipping out, not in.
Is there anything else I can help with?
i am not sure with the answer but i will try it. everytime i enter it and then invoice it comes up with an error message.
you could just enter the purchase at the total including the freight, but if it is billed separately my answer will make it easier.
Here's an example:
Purchase executive desk, $1,800. Freight to deliver to client warehouse $200.
Sold to customer for $3,500.
If freight is billed separately, if marked up, my answer works as follows:
Desk $3,200, freight $300 billed.
Or, if freight is not marked up, Desk $3,300, freight $200.
The cost belongs in cost of goods sold.
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