My company imports clothing so the cost of the inventory will include the cost of the inventory, plus freight and duty. How do I enter the bills for payment and get them associated with the inventory I received? I know I need to go to the Items tab but how do I added costs to the specific inventory I have received during the month?
This is the way I handle it:-
I keep an Excel worksheet on which I record the cost of the imported purchases by suppliers name, I record the suppliers amounts for purchases and any freight they might charge. I also record the Brokers charges for Duty, Freight, and Fees.
Using this information I then can calculated what the percentage is for Duty, Fees and Broker freight charges is for each supplier.
You will need to opening three new general ledger "Cost of goods sold accounts", named:- Freight Variance, Duty Variance and Brokerage Variance..
Then when I get an imported shipment in, I calculate on the bottom of the Suppliers Bill, what my estimated Brokerage, Freight & Duty should be for this shipment, and mark the amounts on the bottom of the bill, e.g.:-
Suppliers Bill $ 1,450.60
Estimated Duty $ 102.50
Estimated Brokerage $ 55.00
Estimated Freight $ 82.75
Total Estimated Cost $ 1,690.85
Estimated Cost $ 1,690.85 / $ 1,450.60 = Land Cost Factor of 116.56%
When entering the individual items into inventory I multiply each amount by 116.56%
Once all the items are recorded we now have a problem as the items add up to $ 1,690.85 but the suppliers bill is only $ 1,450.60 so:-
You go to the expense tab on the bill you are entering and enter the accrual amounts as Credits the amounts for each accrual to their respective accounts.
Note due to rounding you may be off by a small amount, which I add or subtract from the largest accrual amount.
Your purchases are now recorded at their estimated landed cost.
When you finally received your Brokers Bill you will recorded it as you normally would with the exception that you will now charge Brokerage, Duty and Freight to the appropriate variance account. Leaving the variance accounts holding any discrepancy between the estimated and actual landed cost. Over time you can use the variances in these accounts to "fine tune" the percentages you are using.
Sure hope I've explained this as clear to you as it seems to be to me.
