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PDtax
PDtax, CPA firm owner
Category: Financial Software
Satisfied Customers: 4552
Experience:  Have used almost every software package available.
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I am hoping you can help me regarding a Quick Books accounting

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I am hoping you can help me regarding a Quick Books accounting question. i am a bookkeeper working on Quickbooks Pro 12 for a client of mine. She has a interior design business. When she orders material for customers she has a freight charge. She charges her customer for the freight charge. How do I set that up in the system? Does it go in as Cost of Goods or expense and non taxable? I appreciate any help you can give me.

PDtax :

Welcome to the site. I will be helping you today.

PDtax :

Since this is an item for resale, I would establish it as a line item in inventory. Part of cost of goods sold.

PDtax :

Then, when the order is billed, the shipping can be taken out, and invoiced, at a mark up or not.

PDtax :

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.

Customer:

why would the freight portion be part of inventory?

PDtax :

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.

PDtax :

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.

PDtax :

I would not use an expense account. Freight as an expense is for shipping out, not in.

PDtax :

Is there anything else I can help with?

Customer:

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.

PDtax :

you could just enter the purchase at the total including the freight, but if it is billed separately my answer will make it easier.

PDtax :

Here's an example:

PDtax :

Purchase executive desk, $1,800. Freight to deliver to client warehouse $200.

PDtax :

Sold to customer for $3,500.

PDtax :

If freight is billed separately, if marked up, my answer works as follows:

PDtax :

Desk $3,200, freight $300 billed.

PDtax :

Or, if freight is not marked up, Desk $3,300, freight $200.

PDtax :

The cost belongs in cost of goods sold.

PDtax :

Try it, and ask follow up if you need further assistance. Thanks from Just Answer. Don't forget to rate my answer Ok or better if I have assisted you today. I'm PDtax.

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