I just had a client ask me how to handle landed cost in QuickBooks when the shipping gets payable to a different vendor than the items themselves. I decided that this is probably a pretty common issue among users. Here is what I instructed my client to do:
1) Receive the inventory items into stock at their normal cost against the vendor that supplied them.
2) When the bill for the shipping comes in, enter that bill into QuickBooks and offset it to a “Shipping Charges Clearing” expense account. (If you don’t have this account in your COA, go ahead and create it as an expense account.) Be sure to put it against the proper vendor.
3) Pay the shipping bill as normal.
4) Once the bill has been entered, manually figure out what the landed cost would be for each item that was received.
- Example – if you received 5 widgets at $2.00 each and the shipping charge was $20.00, your landed cost would be $6.00 per widget.
5) Now that you know what the landed cost should be for each of the items that were received earlier, do an Inventory adjustment to change the TOTAL VALUE of the goods (not the quantity.)
- Use your “Shipping Charges Clearing” account as the Adjustment account.
- Find the items that were received at regular cost and enter in the new landed cost. Make sure to only adjust the items that were received on that one item receipt.
- Save the adjustment
6) Now, when you look at your “Shipping Charges Clearing” account, the balance should be zero.
Any questions – give us a call!