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Creating an Inventory Part Item

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In the previous blog titled Item and Item Types, we discussed Inventory Part item.
You create Inventory Part item type when you are tracking the products you make/buy, place it in your stock, and then resell it to customers. You have to activate the “Inventory and Purchase order are active” in Edit > Preferences > items & Inventory > Company Preferences by checking its checkbox.

Once it is active, then you can create an Inventory Part Item by opening List > Item List > click Item bar in bottom left > New > select Inventory Part in the Type line and you will have the following window:

 

QB Inventory Part Item

 

Fill-in these fields to keep track how much inventory you have:

Item Name/Number. Enter the name/number of your products in the QuickBooks. This is usually the same as the name of the products you use in the customers transactions.

Sub item of. Tick this when you create an inventory part item as a sub item of another inventory part (parent) item. For example, if you want to differentiate black and white protective clothing, then you would set 2(two) new sub items from Protective Clothing item.

Manufacturer’s Part Number. Enter the manufacturer’s part number or other unique identifier to appear in your purchase orders.

Description on Purchase Transactions. Whatever you enter here will appear on the purchase orders you create to buy inventory items.

Cost. You may enter a cost of your product here, which is useful if it does not change often.

COGS Account. Choose appropriate “cost of goods sold” account when you sell your product.

Preferred Vendor. If applicable, choose a vendor in the drop down list, which will be automatically appeared when you issue a purchase order for this item.

Description on Sales Transactions. Whatever you enter here will appear on the sales transaction forms, such as invoices or sales receipts.

Sales Price. You may enter how much you charge for the product. Again, this is useful if the price doesn’t change too often.

Tax Code. Choose a sales tax code from a drop down list.

Income Account. Choose the appropriate income account for the money you receive when you sell the products.

Asset Account. Choose the asset account for the value of the product’s inventory. The Inventory Asset account is Other Current Asset type account, which is created automatically when you enable inventory tracking.

Reorder Point. Enter a minimum quantity you want to have in inventory. When this quantity is reached, QuickBooks adds a reminder in the Remainder List.

On Hand. Enter the quantity if you have the products already, otherwise leave it blank.

Total Value. If you previously enter the quantity On Hand, enter its value. Otherwise, leave it blank.

As of. The date the inventory Asset Account is created.

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