How to handle consignment items sold in my store
how do i classify & handle consigned items that my store sells for other people? I usually need to collect tax and pay tax for these items, then pass the income on to the consigner.
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12/07/10 9:46am PST
Viewed by asker 12/15/10 9:46am PST
Viewed by asker 12/15/10 9:46am PST
5 Replies
Andilee46
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12/07/10 11:05am PST
The solution
Create an inventory item called Held On Consignment and create sub-items for all items you bring in from the consignor to sell on their behalf. Use the regular Cost of Good account in the Cost of Goods Account side and Consignment Sales - Liability (which you will set up in your chart of accounts as an Other Current Liability account type) on the Income Account side. Since you are responsible for collecting and remitting sales taxes on these items, be sure to mark them as Tax.
Set up the consignor as a vendor. If you want to keep track of the number of items you have on hand for the consignor, you can create a bill for the consignor, entering 0.00 in the amount fields and entering the appropriate items, descriptions and quantities in the items tab.
If you get to keep a portion of the sale as a commission, say it's 25%, then you would create two new service items. The first item is Reduce Liability for Commission and is linked to the Consignment Sales - Liability account, and the rate is entered as a negative percentage. The tax code is Non.
The second service item is Commission Income and is linked to the Commission Income account (which you may need to set up in your chart of accounts as an Income type account). It is also entered as a percentage (using our example above) but is entered as a positive percentage in the Rate field. Again, the tax code is Non.
Next, create a group item for each consignment item you might sell for the consignor, calling the group item name "_______ Consignment Sales" (fill in name of consignment item) and the description would be "Sale of ___________" (fill in name of consignment item). Make sure the "Print items in group" box is unchecked. In the items list for the grouped items, you would select the appropiate Held on Consignment:_________(name of consignment sub-item), the Commission Income and and the Reduce Liability for Commision items.
When you sell the consignment item, you would select the appropriate group item which will incorporate the consignment item and the two service items you set up. All that will show up on the purchaser's invoice is the group item name and description, not the individual items that make up the group.
When you pay the consignor, you will use the Write check and make the amount of the check equal to the amount of the consignment less your commission and use the Congsignment Sales - Liability account in the Account field.
Andrea
05/20/11 12:44pm PDT
Andilee46
I just read the above post. I have similiar situation. I have tax exempt entities that house my merchandsise, sell it for retail ( no tax added) and give me a check for the total amount for the week less their 25 % discount. I may have 6-10 entities in addition to retail customers paying tax at shows.
Can you write out the steps as you did with the above posting?
Thanks so much
05/23/11 10:47am PDT
Your type of situation calls for the use of Sales Orders, which means you need to be using QuickBooks Premier or higher. If you will send me your email address, I will lay out the steps for you.
Andrea
02/09/12 8:21am PST
Andrea,
I just read the above posts and my situation is the other side of transactions.
My boss just wrote a book and he wants to sell his books on consignment, so he is the consignor. He has left his book with a few stores and I need to record the transactions. I am not sure how to go about this.
Could you write out the steps for the transactions for me? I use Quickbooks Pro. My boss is a psychologist and he is tax exempt for his practice, but he has started a separate company for this book.
Thanks for you time.
02/09/12 10:41am PST
Latest post
The first step is to set up each Consignee (store) as a Customer. If there is only the one book title at this time, you can just set up a single inventory part item for the book. If there are multiple book titles involved, and your boss is selling some of the books himself and some are out on consignment, then you will want to set up inventory part items for each book title. For the books that are on consignment, set up an inventory part called Books on Consignment and create sub-items for each book title.
You will create an inventory adjustment to move the number of books that will go out on consignment from the regular inventory part item (which are the ones your boss will be selling himself) to the consignment inventory part item (or sub-items in the case of multitple book titles).
Ideally, you would want to use Sales Orders to track your items out on consignment, however, this feature is available in QuickBooks Premier and higher. Without this feature, it will make tracking the number of books out on consignment and not yet sold more difficult without some manual tracking.
If you choose not to upgrade to QuickBooks Premier, you can simply create an invoice for the consignee for the quantity of books that are out. When the consignee reports the number of books sold, you can edit the invoice for the actual quantity sold and create a new invoice for the remaining quantity still with the consignee to be sold. So, if you left 25 books with the consignee and created an invoice for this quantity and later the consignee reported 15 books sold and sent you payment for those 15 books, you can edit the original invoice to 15 and do another invoice for the 10 books still remaining with the consignee. A bit cumbersome, but doable if you only have one book title out on consignment.
Andrea
