QB Issue Resolution:
You have essentials, so you do not have inventory items, only the plus version has inventory. As a result you will have to use the periodic inventory system
What you buy for a customer and sell immediately, not stock it in other words, is parts expense. Some put it in COGS, but I like to keep COGS as inventory costs, it just makes filling out the income tax form easier. The bottom line is the same regardless
There are two ways to do periodic inventory, choose one and stick with it, you can not mix and match
1. Create an asset account called purchases and post all purchases of item for resale to that account. Periodically, weekly, monthly, etc value the inventory on hand, subtract that value from the amount shown in the purchases account and do a journal entry for the answer to the subtraction
debit COGS for that value
credit purchases for that value
2. Post all purchases to COGS. Periodically, but at least at the end of the year, you value the inventory on hand and do a journal entry.
debit the asset purchases account for that value
credit COGS for that value
Print the P&L
then reverse the journal entry
debit COGS for that same value
credit the asset purchases account for that value
This last journal entry, moves the value of what was on hand at the end of year back to COGS so the cost will be counted against the new year sales.
Resolution for Issue 'Auto parts considered Cost of Goods? Say I bought a motor and put it in, it doesn’t sit on a shelf as inventory. Categorized as “parts” or COGS?' available: Yes (Solved).
Source: Intuit Community forum.
Auto parts considered Cost of Goods? Say I bought a motor and put it in, it doesn’t sit on a shelf as inventory. Categorized as “parts” or COGS?: this issue or error code is a known issue in Quickbooks Online (QBO) and/or Quickbooks. Support for this issue is available either by self-service or paid support options. Experts are available to resolve your Quickbooks issue to ensure minimal downtime and continue running your business. First try to resolve the issue yourself by looking for a resolution described below. If it is a complex issue or you are unable to solve the issue, you may contact us by clicking here or by using other support options.Support for categorized
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