Sorry to be annoying but the analysis in me has identified a variance between your quickbooks starting balance $4349.46 and the statement beginning balance $4349.64.
Weird scenario....purchasing a business (asset sale) and part of sale price is lump sum inventory. The books are horrible; I have no idea how much per item inventory is to calculate COGS. How do I record the 1.) purchase of the lump inventory and 2.) COGS if I sell the inventory
Sounds like a mess - inventory heavy companies are the toughest! Generally, inventory is valued by taking the price paid for all the components that make up the inventory, as well as the labor / shipping to your warehouse. To calculate the COGS, it's a bit trickier, and there are several methods - you can calculate the cost starting from the cost of first item purchase (First in First Out or FIFO)...or the opposite, starting with the last cost of the item you purchased (Last in First Out, or LIFO), or take an average of them all, or find a way to grab the actual cost of each item. Generally, it's very challenging to do without an inventory management system. It would also be a good idea to do a physical count on the inventory to confirm the balances are accurate.
@@yourcfoguy Thanks for the info. This scenario seems a bit trickier...lets say I paid $25K for inventory. There are multiple items that make up the $25k in inventory, but I don't know how much they are individually. How do I calculate COGS if I sell some of those items without knowing what they individually cost? Is there a basic depreciation I could use instead?
Yes, you can take the total cost and divide it by the total units on hand. This is called the Weight Average Cost method. So if you have 100 units, you'd value each unit at $250 in COGS. It can get trickier though if you have different product types that you are selling, and you would ideally do this for each product type
Good luck and thanks for following along! I'll be making a video shortly on how to do bookkeeping in QBO - is there anything specifically you'd like me to explain in the video?
