Packaging Inventory
If you ship items to your customers you undoubtedly use shipping boxes and materials (packing, tape, labels, etc). how you account for them can be a headache. I carry them in inventory as an “Other Asset” and set the cost account to shipping expense, the income account to sales and a sale price of zero.
The tape, packing material, labels, stuff like that I treat the same way I suggest accounting for bulk items (see the TAG Bulk Item Acct’ng). You can also use the same system for the boxes.
Short of putting the items on the invoice as packing materials or something (which looks kind of flaky IMO) there just is not any other way to do it that I can see.
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May 21st, 2008 at 6:16 pm
If you don’t have a large number of inventory items, some people will create a “group” item for what is actually shipped, and the group item consists of the “real” item, the box and the packing material. Don’t have the group item set to display the detail lines. Then when you sell the group item, it pulls the real item, the box, the packing material.
rustler Says:
May 22nd, 2008 at 3:56 am
Yea you could do it that way, I tried it, what was happening to me was that I was forgetting to sell the group and was selling the item, so I stopped doing it that way. And that was the reason I didn’t mention it, that plus the way the list grows and it is hard to combine items in one shipment.
November 18th, 2008 at 7:04 pm
I think I am on tack here but not quite. I have two scenarios that I am confused on.
1.
I am an independent dealer for Amsoil. Lets say I sell 5qts of oil and 1 filter to a customer. My sale price is set by Amsoil itself. So If i lump my sales into the items purchased when i receive them can I still accurately charge for shipping on an invoice. Most of my customers are local pickup. However I do want to pass that shipping on to them for getting the product here.
2.
When I sell a product I throw an Amsoil Sticker in the box for them. I also give my oil change customers a little sticker for their windsheild so that they know when the next oil change is due. I do not want to add this to the invoice. Would I just count the stickers at the end of the month and do an inventory adjustment then.
Let me know if I need to explain a little more. Thanks.
Greg
rustler Says:
November 19th, 2008 at 7:02 am
Greg:
I am slightly confused here. I thought you bought the oil (filters etc) at a discount and sold at the company price - true?
If so, when you buy the oil it should be an inventory item and the cost is held in inventory asset. When you you put it on the invoice and sell it, the cost is moved from inventory asset to COGS, the sales price is put in sales an income account. In the P&L the two are subtracted and profit is the result.
Shipping to receive the oil is part of the cost of the oil.
Yes I would inventory periodically and use inventory adjust to move the number of stickers used to COGS.