How to handle this depends on the version of QuickBooks you have, the kind of analysis you want out of QuickBooks, how much time you have for data management, how long your vinyl and ink supplies stay around, and some details about the decals that you are printing. Lots of issues involved, so it is hard to give a short answer in a blog comment.

For example, if you have QB Pro, you don’t have assembly items, so that limits your choices.

If your decals are “stock” items, that you repeat, you might make them inventory assembly items so that you can consume the vinyl and ink and get some cost analysis of your produced items. But that makes more work, you have to “build” the decals, which takes extra steps.

If your decals are custom made each time, with different amounts of ink/vinyl, then assemblies might not work (although if you have QB Enterprise then there are ways to make that work). You might consider using a generic Group item that you modify each time you issue an invoice. But you don’t get the cost-to-make analysis.

If your vinyl and ink are bought in large bulk quantities, and are low cost per unit, and are used up fast, those might be non-inventory items. But that changes how you do the accounting…

In answer to your specific question about the discount, we DO include it as a net credit to our landed cost of product. That is not really a tax question so much as an internal accounting / management reporting issue. (Tax is based on the net so whether you apply the credit to the COGS [cost of goods sold] from inventory or as a direct credit to expense, the net is the same.)

Pat

I am an accountant in a food import/export trading company in the US. We use landed cost in all of our transactions. The methodology we use is to allocate all additional freight and handling costs to the inventory items based on weight, or by case count, depending on the mix of products you are shipping/receiving. Weight and cube are the primary bases of determining freight rates (in addition to distance and speed) so these should be the primary factor to consider in costing our inventory. For example, A box of screws is rather small and light compared to a case of hammers. It doesn’t make sense to add the same amount of freight costs to the screws as you do the hammers. Multiply this across an entire freight container/trailer and you get my point.

Also, for those involved in international import/export trade, there can be MANY different charges and vendors involved in these transactions (truck, rail, steamship, port charges, warehouse/cross dock, inspections, documentation, etc.). It is definitely NOT for the faint at heart!

Hope this helps.
Pat

You can use the expense tab on the original bill, at the time of the receipt.

You can use the inventory clearing account, and then make the adjustment to revalue the item to include that amount.

You can play with a Custom Transaction Detail report to filter for the expense adjustments, to see the values of the freight that you’ve paid. These are powerful and flexible reports that people often aren’t familiar with, and they can help a lot.

It isn’t simple. QuickBooks doesn’t manage this well as I think we can all agree. The best solution depends on many factors, such as your view of what your “cost” should include from a financial and tax viewpoint, how you want to manage costs from a managerial standpoint, how you want to track freight costs from a managerial standpoint, how long your items remain in stock, and more.

There isn’t one solution for everyone, and it is hard to lay out all of the options for a particular business without doing a careful analysis of your individual needs. Unfortunately, we often find in QuickBooks that we have to compromise, or find a workaround.

But isn’t using the value adjustment the only way to 1)properly account for the landed cost of the item while maintaining the “cost” of the item at its real cost; 2)properly allocate freight cost to items so that the average cost reflects what you’re really paying (including the freight); 3)even remotely giving your self a chance in heck of figuring out what you’re paying in freight for particular items.

Otherwise, wouldn’t you be changing the “COST” of the item at each order AND you’d have no way to (even manually by looking at reports and adding up on paper) see what you paid in freight for those items?

I hope I’m not being to nit-picky. We’re trying to get QB implemented and all these details of where QB doesn’t do simple functions that any rational person would expect is really holding us up – we don’t want to start down the wrong path and have to start over or redo a bunch of work.

Thanks

The advantage of that is that you do have a separate transaction/account for the freight posting. I would look into creating a “Custom Transaction Detail Report” that was set to filter the freight expense account, to see the information that you want.