# Accounting help. Handle inventory production.



## trexart (Aug 3, 2007)

Not sure if anyone can help, but I have an accouting question that I just can't get my head around.

Okay, we manufacture our own blank shirts which we then get screen printed with our designs. I need to keep track of inventory not only of the blanks, but then of the finished products.

I have found plenty of information on production of products where you build a product based on multiple materials you may have bought as parts, but I can't seem to find any information on taking one item, and getting another company to do work on it, and it coming back and being 'worth' more as far as 'Cost of Goods' and 'Stock on Hand' is concerned. I can't seem to understand how the invoice for screenprinting will apply along with the manufacturing, etc...


So for example, when I receive an invoice for our shirt manufacturing, the received goods apply to the 'Stock on Hand - Building Blocks' account.

When something is sold, I create a stock journal which debits 'Stock on Hand' and credits 'Cost of Goods Sold'. (I think the debit and credit is the right way around though it is possible I've said it wrong) 

What I don't understand is how my screen printing invoice should be applied plus the stock journal entry. I know somehow I should credit to the 'Stock on Hand' and debit the 'Stock on Hand - Building Blocks', but I'm not sure if the screen printing invoice should be handled the same as the manufacturing invoice because it is really a service, and not a physical product.

Should I even have more than one account for finished product and building blocks? I did that to have a better feel of how much finished stock we had and how much ready to be printed we had, but maybe that is stupid.

I might just be over thinking this, and I should probably go to an accountant, but I'm trying at the moment to just enter everything as best I can before sorting things out with an accountant. Anyway, if anyone on here has accounting experience, a little bit of help would be fantastic.

Cheers,
Steph


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## AtkinsonConsult (May 2, 2011)

Steph:

I'm not an accountant either, but Shopworks is a great system to use for this. You can create a "Pre-print" inventory order type and add/deduct goods from it. It works great, and will save you a lot of headaches.

Are you familiar with this system in Australia? I know the folks at Shopworks and can put you in touch with them. PM me for more info.

-M


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## Sunjoa (Oct 25, 2011)

trexart said:


> Not sure if anyone can help, but I have an accouting question that I just can't get my head around.
> 
> Okay, we manufacture our own blank shirts which we then get screen printed with our designs. I need to keep track of inventory not only of the blanks, but then of the finished products.
> 
> ...


Do you still need help with this? I just found your post. I am not an accountant but did study it a long, long, LONG time ago. You should be able to create a summary level asset such as "Finished Goods" or "Goods Available For Sale" or the like. The summary level would be composed of "Finished Goods - Blanks" and "Finished Goods - Decorated" or the like. One way would be to move your finished goods-blank into "Work In Process - decorated" when you send the shirts to be printed. When the shirts have returned to you remove them from WIP and into the finshed goods - decorated with an expense recorded for the charges from the printer. You can split your asset categories down as far as it makes sense for you to do so. After a certain point the information derived is not worth the effort to capture it. Hope this helps. Check with an accountant, though. Everybody has different tax laws and I would hate for you to make a bad decision based on something I said. Best of luck.


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