Also, the selling price is adjustable per invoice. So as you sell the inventory you will use the current sales price. Fees are calculated by Amazon on the Payment Statement. So you do not need to do that, except as a reference as noted in the Custom Fields, if you choose to use them for the ROI report.
We sell books that we purchase for a variety of prices. For instants we could pay $20 for 5 books one day and $20 for two books the next. Can I use an average price as the purchase price for the books or do I need to list an exact purchase for for each book? I hope you understand what I am asking.
I am assuming you are listing your books individually and not as just “books” in your inventory. When I list books, I setup the books individually in Items as Inventory Parts and use the price I paid to do that setup as shown in the lesson. Setting them up individually helps keep track of inventory held at Amz warehouses. Just using a bulk inventory called “books” will get awful confusing. So, hopefully you are setting up individual ASIN for books.
It will depend on how accurate you want your reports, as well. I don’t mean that you can just use any amount you want, I am referring to the ROI report in the last lesson because it pulls the cost from the Inventory Item List. Purchase transactions (cc purchases, cash purchases, etc) pull the cost from the Inventory Item fields as well, however you can change the cost as needed in the transaction. This will affect the Inventory Total Value and Cost of Goods Sold – Profit and Loss and Balance Sheet.
I would say you need to use the price you paid as cost. That is the cost. So, 5 books at $20 may mean that the books were $4.00 each. The cost would then be $4.00 per ASIN. However, you may realize that one of the books is really worth as a cost of $8.00 because you can sell it for $50.00, while the others may only be worth $3.00 each because they will sell for $20. This is a judgement call as to how you want to show the cost for each book when you buy them in the bulk price. The decision you make will affect the ROI for each book. Does that make sense?
I do most of my own prep work, if I get in 50 items (all the same UPC) I may only send 25 items into FBA, so Amazon has 25 and I still have 25 in my warehouse. Will I need to set up another Cost of Goods account for my warehouse, bring all stock into it and then create an invoice to Amazon FBA each time I send stock, that would transfer stock from one CoGS account to another CoGS account. My assumption is that the Amazon FBA CoGS account is for items that Amazon has, not items I have that are going to be shipped to them at a future date. Or do I have this totally wrong in my mind?
Hi John, There are a couple of things going on here that we need to look at, expense and convenience. Tracking different locations of the same item, as in a warehouse vs FBA in QuickBooks requires Advanced Inventory setup in Enterprise. In case you aren’t familiar with Enterprise, it is pretty expensive. It starts out about $1000 per year subscription. Yikes, too rich for me. So knowing the expense, we need to weigh the convenience. I would love for QB Pro to have all the features that Enterprise has for $200, but I don’t think that’s ever gonna happen. We need to be creative in our thinking. So we need to remember a few things about Inventory as it pertains to QB Pro. The biggest thing is that Items – Inventory Parts – can only have one Inventory Asset account. No splitting them between locations. We can and do use sub-accounts to separate Items into different locations, but only one location per ASIN or Inventory Part. Make sense?
So what can we do to show the inventory in two locations? Well, we can purchase all inventory for FBA and set it up in Inventory Asset:FBA. If we have some sent into FBA and some at home in the guest room, for instance, we can take an inventory count of the guest room and add it to the Inventory Report from Seller Central. Then match it to the Physical Inventory Worksheet. That’s how I do it. Not too difficult.
If you have other outlets like eBay or your own website, like I show in the lessons, you can set those up. However, all the items must go to one sub-account of a particular Item – Inventory Part.
An option that may make keeping track a little easier would be to create an Excel worksheet. You would need to manually move items around on the worksheet, but lots of sellers do it this way.
To answer your questions about CoGS and making an Invoice to AMZ when shipping inventory, I would not do either. First, a CoGS is Cost of Good SOLD. The key word is SOLD. The items would not be sold so I wouldn’t use that. (I do sometimes charge things to CoGS that aren’t necessarily sold, like damaged inventory, but that is kind of a cost of selling goods. I mean, things get broken.) Second, I would not create an Invoice either because there is no way to relieve that charge to AR except that it be paid by AMZ. The Payment Statements just would not work that way, in my opinion. I think that would be a nightmare to keep up with.
My advice: Try the Excel worksheet, if you feel like you need it. I don’t have that much inventory sitting around long enough, since I try to buy what I will sell out of within a month. Then just replenish. I alternate my orders so I can get an order in UPS in the morning and ship it back out the same afternoon or next day, replenishing about every three weeks. Then I just go to Manage Inventory and add the columns across for items and compare to my Physical Inventory. Done. Hope that helps. (I didn’t take an Inventory for several months last year. Too busy. Then End of Year rolled around, I was right on the money. Well, almost. I found two items that were “Warehouse Damage” and I filed for reimbursement. So it pays to take an inventory count every so often.)
Thanks Vicki, I had already , in the middle of the night, came to the conclusion that what I mentioned would not work, I will use one CoGS account and keep as simple as possible. I am not green to inventory, but much was done in the past by secretaries and other hired help, I did not do the majority by myself. It has to be simple for me, I hate the paper work part and tend to procrastinate. I will proceed a little farther with class and see how it goes, so far it has been helpful, I may be trying to overthink problems that have not popped up yet or may not exist. Thanks again.
Hey John, I do my best thinking while I’m asleep! 🙂 Lots of answers come to me in the middle of the night. You’re doing great. Keep up the good work. Yes, you will find more opportunities to make changes as things pop up.
Vicki, please define “inbound shipping” as you see it. To me, since I warehouse my products, inbound is shipping cost associated with the item being shipped to me, outbound shipping is my outbound shipping to Amazon. What seems reasonable to me is to add inbound shipping to cost of item and then outbound to Amazon as an expense, does that make sense?
Hi John, inbound shipping to most people is as you describe it. However, Amazon has it own terminology. In the Chart of Accounts, we setup the Selling Fees to match the Amazon Payment Statement terminology. This way we can also setup our Bills and Excel worksheet we use in the payment process and basically match the terms on our Statements. (easy posting) Your question is in the Adding Inventory Sample Item lesson, so I am thinking you may not be that far in the course to know about the Payment Statements. I hope I’m not confusing you by bringing up the Payment Statement. Anyway, there are a couple of shipping expense accounts on the Chart of Accounts. The sub-account “Inbound Shipping” under Selling Fees is used solely for processing Payment Statements. (Amazon calls it Inbound Shipping because it is coming into their warehouses.) The expense account that is called just plain “Shipping” is for when we ship things out that are other than Amazon FBA items. Also, the shipping that we pay on items we purchase for resale is usually added back into the cost for inventory. Although, some people keep that separate and charge the shipping cost to the plain “Shipping” expense account. For now, I would recommend you use the Chart of Accounts as detailed in the lessons. Follow it all the way through with posting Payment Statements using the posting worksheet provided. Should you decide later that it is confusing you, make changes. Sound like a plan?
Now for the Inbound Shipping that is listed under the User Defined fields on the Item setup itself, that is not an actual account as in accounting. Sounds crazy, I know. It is a label we will use in the ROI report later. The reason I use Inbound Shipping here is because we get the amount from the AMZ Seller App as an approximate cost for shipping the item into AMZ. In theory, it should match or at least be close to the actual Inbound Shipping we will be charged when we ship. You can change it as needed. It is not reflected in your accounting, only in the ROI report we will do in the end.
What do I do if one of my products has a price change when I’m half way through selling the inventory? Do I average the selling price and fees?
Hi Earl,
When you setup the Inventory Item, you will use the cost that you paid for the item at the time of purchase. As new inventory is purchased to replenish, you will use the cost of the new items in the purchase instrument (Check, Credit Card, etc). QB will do the averaging for you. Here’s a QB help link that may help explain https://quickbooks.intuit.com/r/accounting-taxes/average-costing-vs-fifo-whats-best-way-analyze-inventory-costs/.
Also, the selling price is adjustable per invoice. So as you sell the inventory you will use the current sales price. Fees are calculated by Amazon on the Payment Statement. So you do not need to do that, except as a reference as noted in the Custom Fields, if you choose to use them for the ROI report.
Thank you!
We sell books that we purchase for a variety of prices. For instants we could pay $20 for 5 books one day and $20 for two books the next. Can I use an average price as the purchase price for the books or do I need to list an exact purchase for for each book? I hope you understand what I am asking.
Hey Janie,
I am assuming you are listing your books individually and not as just “books” in your inventory. When I list books, I setup the books individually in Items as Inventory Parts and use the price I paid to do that setup as shown in the lesson. Setting them up individually helps keep track of inventory held at Amz warehouses. Just using a bulk inventory called “books” will get awful confusing. So, hopefully you are setting up individual ASIN for books.
It will depend on how accurate you want your reports, as well. I don’t mean that you can just use any amount you want, I am referring to the ROI report in the last lesson because it pulls the cost from the Inventory Item List. Purchase transactions (cc purchases, cash purchases, etc) pull the cost from the Inventory Item fields as well, however you can change the cost as needed in the transaction. This will affect the Inventory Total Value and Cost of Goods Sold – Profit and Loss and Balance Sheet.
I would say you need to use the price you paid as cost. That is the cost. So, 5 books at $20 may mean that the books were $4.00 each. The cost would then be $4.00 per ASIN. However, you may realize that one of the books is really worth as a cost of $8.00 because you can sell it for $50.00, while the others may only be worth $3.00 each because they will sell for $20. This is a judgement call as to how you want to show the cost for each book when you buy them in the bulk price. The decision you make will affect the ROI for each book. Does that make sense?
Thank you for the help
I do most of my own prep work, if I get in 50 items (all the same UPC) I may only send 25 items into FBA, so Amazon has 25 and I still have 25 in my warehouse. Will I need to set up another Cost of Goods account for my warehouse, bring all stock into it and then create an invoice to Amazon FBA each time I send stock, that would transfer stock from one CoGS account to another CoGS account. My assumption is that the Amazon FBA CoGS account is for items that Amazon has, not items I have that are going to be shipped to them at a future date. Or do I have this totally wrong in my mind?
Thanks
John W
Hi John, There are a couple of things going on here that we need to look at, expense and convenience. Tracking different locations of the same item, as in a warehouse vs FBA in QuickBooks requires Advanced Inventory setup in Enterprise. In case you aren’t familiar with Enterprise, it is pretty expensive. It starts out about $1000 per year subscription. Yikes, too rich for me. So knowing the expense, we need to weigh the convenience. I would love for QB Pro to have all the features that Enterprise has for $200, but I don’t think that’s ever gonna happen. We need to be creative in our thinking. So we need to remember a few things about Inventory as it pertains to QB Pro. The biggest thing is that Items – Inventory Parts – can only have one Inventory Asset account. No splitting them between locations. We can and do use sub-accounts to separate Items into different locations, but only one location per ASIN or Inventory Part. Make sense?
So what can we do to show the inventory in two locations? Well, we can purchase all inventory for FBA and set it up in Inventory Asset:FBA. If we have some sent into FBA and some at home in the guest room, for instance, we can take an inventory count of the guest room and add it to the Inventory Report from Seller Central. Then match it to the Physical Inventory Worksheet. That’s how I do it. Not too difficult.
If you have other outlets like eBay or your own website, like I show in the lessons, you can set those up. However, all the items must go to one sub-account of a particular Item – Inventory Part.
An option that may make keeping track a little easier would be to create an Excel worksheet. You would need to manually move items around on the worksheet, but lots of sellers do it this way.
To answer your questions about CoGS and making an Invoice to AMZ when shipping inventory, I would not do either. First, a CoGS is Cost of Good SOLD. The key word is SOLD. The items would not be sold so I wouldn’t use that. (I do sometimes charge things to CoGS that aren’t necessarily sold, like damaged inventory, but that is kind of a cost of selling goods. I mean, things get broken.) Second, I would not create an Invoice either because there is no way to relieve that charge to AR except that it be paid by AMZ. The Payment Statements just would not work that way, in my opinion. I think that would be a nightmare to keep up with.
My advice: Try the Excel worksheet, if you feel like you need it. I don’t have that much inventory sitting around long enough, since I try to buy what I will sell out of within a month. Then just replenish. I alternate my orders so I can get an order in UPS in the morning and ship it back out the same afternoon or next day, replenishing about every three weeks. Then I just go to Manage Inventory and add the columns across for items and compare to my Physical Inventory. Done. Hope that helps. (I didn’t take an Inventory for several months last year. Too busy. Then End of Year rolled around, I was right on the money. Well, almost. I found two items that were “Warehouse Damage” and I filed for reimbursement. So it pays to take an inventory count every so often.)
Thanks Vicki, I had already , in the middle of the night, came to the conclusion that what I mentioned would not work, I will use one CoGS account and keep as simple as possible. I am not green to inventory, but much was done in the past by secretaries and other hired help, I did not do the majority by myself. It has to be simple for me, I hate the paper work part and tend to procrastinate. I will proceed a little farther with class and see how it goes, so far it has been helpful, I may be trying to overthink problems that have not popped up yet or may not exist.
Thanks again.
Hey John, I do my best thinking while I’m asleep! 🙂 Lots of answers come to me in the middle of the night. You’re doing great. Keep up the good work. Yes, you will find more opportunities to make changes as things pop up.
Vicki, please define “inbound shipping” as you see it. To me, since I warehouse my products, inbound is shipping cost associated with the item being shipped to me, outbound shipping is my outbound shipping to Amazon. What seems reasonable to me is to add inbound shipping to cost of item and then outbound to Amazon as an expense, does that make sense?
Hi John, inbound shipping to most people is as you describe it. However, Amazon has it own terminology. In the Chart of Accounts, we setup the Selling Fees to match the Amazon Payment Statement terminology. This way we can also setup our Bills and Excel worksheet we use in the payment process and basically match the terms on our Statements. (easy posting) Your question is in the Adding Inventory Sample Item lesson, so I am thinking you may not be that far in the course to know about the Payment Statements. I hope I’m not confusing you by bringing up the Payment Statement. Anyway, there are a couple of shipping expense accounts on the Chart of Accounts. The sub-account “Inbound Shipping” under Selling Fees is used solely for processing Payment Statements. (Amazon calls it Inbound Shipping because it is coming into their warehouses.) The expense account that is called just plain “Shipping” is for when we ship things out that are other than Amazon FBA items. Also, the shipping that we pay on items we purchase for resale is usually added back into the cost for inventory. Although, some people keep that separate and charge the shipping cost to the plain “Shipping” expense account. For now, I would recommend you use the Chart of Accounts as detailed in the lessons. Follow it all the way through with posting Payment Statements using the posting worksheet provided. Should you decide later that it is confusing you, make changes. Sound like a plan?
Now for the Inbound Shipping that is listed under the User Defined fields on the Item setup itself, that is not an actual account as in accounting. Sounds crazy, I know. It is a label we will use in the ROI report later. The reason I use Inbound Shipping here is because we get the amount from the AMZ Seller App as an approximate cost for shipping the item into AMZ. In theory, it should match or at least be close to the actual Inbound Shipping we will be charged when we ship. You can change it as needed. It is not reflected in your accounting, only in the ROI report we will do in the end.