How do you setup an inventory Item for a cash basis set of books? This item is a freebie and will cost the company but will be a no charge item to the customer. On the Cash Basis, it still shows that the customer owes for the N/C Item on Bal.Sheet.
I would add the item put in the cost of the item and a zero charge on the income side. All transactions should be made using a sales receipt (invoices and bills are for accrual accounting) and since you pay the vendor for the item when he gives it to you (cash basis) instead of using the expense tab on the check use the item tab.
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My problem is that they are accrual basis and converted to cash for the tax return. So they are using invoicing to their clients. They want to show the free item on the invoice. They have set up the item as you suggested but it does not flow correctly when you print a cash basis balance sheet under Accounts receivable. It is still showing the cost as being owed on the cash basis for the customer.
Sounds like the item is not set up correctly. If you have made this item an inventory part type then make sure the expense side goes to cost of goods and the income side price is zero. If the item type is non inventory then make sure the box that makes it a two sided item is checked. Then follow the instructions above.
PLEASE mark this answer as solved (click the button under the answer in the lower, right corner) or post additional questions or comments so that I can be of further assistance. Thanks so much!!!
The problem is not the software but what your clients are wanting it to do. You are either a cash basis business or an accurral basis business but you cannot have both. So the books are correct and if they are reporting on their tax return a different basis then their books are showing you need to find out how to convert the information on the return.
PLEASE mark this answer as solved (click the button under the answer in the lower, right corner) or post additional questions or comments so that I can be of further assistance. Thanks so much!!!
