I just opened a Mexican Import business. I record my sales each day as "Daily Sales Summary". I have my inventory set up as groups, such as candles, pottery, wrought iron" because my inventory changes. When I purchase merchandise it is recorded as Inventory Asset: Candles, etc. When I sell it, it is recorded as candles, pottery, etc. Due to the fact that my inventory changes, I don't record prices for each piece, instead I record the total cost. When I do a Profit and Loss or Balance Sheet, my Cost of Goods Sold, does not look right. I'm not sure how my inventory should be set up.
Generally, items in inventory are set up with the purchase price. If you are seting them up all at once like when you purchase a business, you set them up at book value (cost). When you sell inventory the default entry in QB is to reduce inventory at cost and increase COGS also at cost. over time you may purchase the same item at different costs. QB automatically values them at average cost and when sold chagres COGS at average cost.
I have clients in retail that keep a wide variety of inventory in the same item number and for them they do not mind the averaging feature compared to the effort of seting them up as seperate items. However, if you want to be more exact, you need to be more selective and have more inventory items set up.
If you would like to see the specific chages to your COGS account just go to the chart of accounts and open it from there. You will see the individual postings and you can see how the P%L total is arrived at.
When you track inventory, you must set it up the way you are going to sell it. If you buy 36 wigits with 12 per case and you're going to sell them individually, you must bring them in as 36 individual units and sell 36 individual units. You cannot purchase 3 cases and sell 36 units.
