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Inventory Builds in QuickBooks Pro - Five Easy StepsBy Jennifer A. Thieme |
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Have you ever wanted to build a new component item out of existing inventory items, so that the new item shows on a customer’s invoice, rather than each individual part? In the QuickBooks world this functionality is known as Inventory Builds. It appears on Premier and higher editions of the software, but not in Pro or Basic (Simple Start does not support inventory asset accounts or COGS).
However, there is a work-around for those who need to build new items from individual parts, but are using QuickBooks Pro. This is useful for at least two reasons:- Innovative business owners may have ideas that they want to keep proprietary. Taking individual parts, they may want to sell them as a unique group under their own brand.
- Invoices are long and cumbersome. Grouping individual items together to sell as a unit might be a good solution.
Follow these easy instructions to build a unique inventory part from individual inventory items:
1. From the Vendors menu, select Receive Items. Make certain the screen says Item Receipt Only and the Bill Received box is unchecked.
2. In the Vendor box, scroll up to create a new Vendor called, For Inventory Builds Only. After this new “vendor” is created, select today’s date, and leave the Reference and Amounts fields blank. In the Memo line, you type a brief explanation of what you are doing.
3. Under the Items tab, select all of the inventory parts you want to assemble. Make certain that the Quantity is a negative number, based on how many of each individual item you will use in the new item.
4. Then, under the Item column, scroll up to create a new Inventory Part item. Assign it a name or number that is meaningful to you. Do not enter a cost in the Cost box. Select an appropriate Sales account, and fill in any other information as needed, such as the taxable status or sales price. Click Save and Close.
5. Back at the Item Receipt Only screen, the new item should automatically appear. Enter the amount from the Total line above (in the purple section) into the Cost column of the new item. The Total above (in the purple section) should now change to zero. Enter the Quantity of the new item as one. Before saving, take a moment to look at what you have done. Can you see how you are simply lowering the quantity and dollar cost of each individual part, while raising the quantity and dollar cost of the new part? As long as you are certain that you have entered the correct amount and type of individual parts, and that the Cost column zeros out (as evidenced by the zero amount in Total field of the purple section), you have completed the transaction correctly. QuickBooks will ask if you want to update the item with the new cost. Select Yes. Click Save and New, or Save and Close, as appropriate.
By following these instructions, you have deducted the individual parts from your inventory, and added a new part with the same exact cost. The net dollar change in the inventory asset account is zero, exactly as it should be. Accounts payable reports will not be affected, and you are now free to use this new item on customer invoices. |
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About the Author |
| Jennifer A. Thieme invites you to contact her with your QuickBooks or accounting questions. She’s the owner of Solid Rock Accounting Services and has been in the bookkeeping, income tax, and payroll business for nine years. She’s a Certified QuickBooks Pro Advisor, and a Registered Tax Preparer. Resolving QuickBooks or other accounting issues is her specialty. She also offers training, general bookkeeping, income tax, and payroll services. Free QuickBooks software trials, free payroll quotes, and free initial consultations are always available. Visit her link above for contact information. |
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