Accountancy Forum
Issues posting costs within a departmentalized chart of accounts - Printable Version

+- Accountancy Forum (http://www.accountancy.com.pk/forum)
+-- Forum: The Profession (/forumdisplay.php?fid=4)
+--- Forum: Accounting and Audit (/forumdisplay.php?fid=7)
+--- Thread: Issues posting costs within a departmentalized chart of accounts (/showthread.php?tid=19775)



Issues posting costs within a departmentalized chart of accounts - brightnshiny - 05-18-2015 08:08 PM

We recently made many changes in the structure of the business. We began a flat rate system, started keeping an inventory and changed the chart of accounts to reflect the different departments of the business for income and cost purposes. The issue that is plaguing us at the moment is this: When we purchase inventory items, we do not know which department those items will ultimately be sold in. We are using quickbooks proplus for our accounting software. When we initially setup the inventory items, we used uncategorized inventory for the cogs account and uncategorized income for the income account. The inventory asset account was prefilled by quickbooks. This seemed to work until we made the general journal adjustments after the items were used on customer invoices and we knew which department they needed to be posted in. We removed the cost from the uncategorized inventory account and put the cost into the correct department, however the effect this had on the profit and loss was to zero out the costs. We then tried using the inventory asset account as the cogs account for initial purchases and the result of that was zeroing out the inventory asset since quickbooks automatically posts to this. We have not had any previous experience with inventory accounting and do not have an accountant to consult. We've corrected all the postings back to the initial setup of uncategorized inventory and uncategorized income now, but we don't know if this is correct and we question how to post the costs to the right categories after the sale without wiping out the costs on the profit and loss. Any comments are very much appreciated! Thank you.