USA Account for subcontracting vendor

[roxanna9]

Hello,

My company have to transfer 10 items from inventory to be cleaned to a subcontractor. How can I post it? I was told that I cannot adjust the 10 items by using the account "Product cost" because I am not returning the items, I am only moving the items and by using the account "product cost" this will affect my income statement. I was told that I should create an account such as " Pending Inventory" or "Transfer Inventory" (Expense account) and use this one only to keep the 10 items not available. Then create a document to shipped out the 10 items. When I receive back the 10 items, I must add them to the inventory by using the same account. Is it correct what I was told? If it is so, what would it be the name of the account to put 10 items not available temporarily and what will it be the name of the document to keep tracking these items moved to the subcontractor?
Thank you for your help

 

[kirby]

Create a new inventory acct called "Offsite Inventory". Move the 10 items to that account. When they return, move them back to Inventory.

 

[roxanna9]

Create a new inventory acct called "Offsite Inventory". Move the 10 items to that account. When they return, move them back to Inventory.

Thank you Kirby fr your answer. I will create the account "Offsite Inventory" as an asset account, is that correct?

Thank you again

 

[kirby]

Yes

 

[roxanna9]

Thank you Kirby fr your answer. I will create the account "Offsite Inventory" as an asset account, is that correct?

Thank you again

Hi Kirby,

I work with Sage 50 Quantum and after I created the Offsite Inventory account, I tried to move only the 10 parts (In total we have 50 parts) to the new account (Offsite inventory), but the system does not give the option to transfer a partial quantity. What do you suggest?


Thank you for your help in advance!!

 

[kirby]

I suggest you consider making a manual entry given that the system will not allow a partial entry. To do so, you need another account which will be a contra to the inventory account. Thus:

System Inventory account 2,000
Contra inventory account (10)
Net on hand inventory 1,990

Offsite inventory 10

Total inventory 2,000

And your entry was
Dr Offsite Inventory 10
Cr Contra inventory acct. (10)


Which adds new g/l accounts and subtotal accounts. If that does not work for you, an alternative is to keep a manual log of the offsite inventory without adjusting the system inventory account.