How to add Duty and Other Charges to the Inventory

US QuickBooks Premier : 2012: Accountant

1.       I have a customer in to Trading Business and each time he imports goods from Foreign Country from different Vendors. There is absolutely no problem in entering vendor bill with inventory. But he is also paying customs duty and shipping charges separately to the different vendors.

a)      The Vendor bill entered with inventory that goes to the different accounts

b)      The shipping Agency Payment and Import Duty Payment booked separate expenses accounts

c)       This is the recurring process and how to add the duty expenses and shipping charges to the inventory. I know you can do so by Adjusting inventory value. But I am little bit confused, on the following

d)      You can adjust the inventory value towards shipping and customs duty first time, when there is a quantity on hand, again we importing the same items. How will you adjust the value against the old inventory value ( that value already included with shipping charges and duty)

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2 Replies

qbteachmt

Allstar, Accountant Community AllStar

12/23/11 10:21am PST

Your solution is to use WIP accounting for all costs, then create a vendor bill that allows you to "purchase from WIP" and that is the step where you will allocate costs to the specific items.

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Stephen_Ghana

New Member

01/29/12 7:38pm PST

Latest post

If you using Premier or Enterprise, you can use the Inventory assembly to add duties and other cost to the inventory.

You set a service item up, example Duties and Handling Charges, and link it to the duty account. Check the box "This service is used in asemblies or is performed by a subcontractor or partner" and make the cost $1.00.

Set the item up as inventory part and make a ub account of CIF so as to distinguish it from the inventory assembly which you will have to creat for that same item.

In the inventory assembly set up under bill of material, select the inventory part item and the service item linked to the duty account. Under the Qty column, put 1 for the inventory part and the value of the duty applicable to a unit of the item for the service item linked to the duty account.

Go back to Build Assemblies under Inventory Activities and build the number of items which were imported. This will move the value of the duty from the duty account into inventory.

I recomment that the duty be set up as current asset.

Senario:

GTZ Inc Imports 100 computers at $100 each from KBL, and pays duty and other charges of $1,000.

Creat a Bill for the 100 computers from KBL @$100 which will be set up as inventory part and a sub item of CIF or CF, and another bill for the duty which will go into the duty account.

Apportion the duties for the 100 computers so that each will get $10.

Creat a service item linked to the duty account with $1 as the rate.

Creat an Inventory Assembly, and under the bill of materials, select the computer as inventory quantity 1 and the service item for the duty with quantiy $10.

Build 100 assemblies, and the duty will be moved from the duty account to go and add to the cost of the items purchased, so you have $110 as the value of each computer.

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