How do I add simple inventory as assets?

MagnoliaArt

I am fairly new to Wave and most of my accounting needs are fairly simple. I have read help articles about listing inventory as assets. I created categories on my Chart of Accounts, and created items in my products category under Products and Services under Sales. But that's as far as I can get. I am an artist, and I create custom artwork, prints, and other products with my artwork on it. I want to be able to keep an inventory list with the number of each variety of print I have available for sale, as well as note card packets, and any other items I have ready to sell. Is this this something I can do on Wave? I understand it won't automatically track those items or know when I sell them out of my inventory.

Mikeg

@MagnoliaArt,
That is correct that Wave cannot do inventory tracking automatically. You can however, add inventory as an asset if you want to. If you are looking to track how many of x, y and z you have, you may be better off using excel. The inventory account on the balance sheet would represent the total cost of the items that are being held for resale. You can create multiple inventory accounts as well. Since Wave cannot adjust the inventory balance, you would need to do that manually through journal entries.

Phil_Barks

@Mikeg said:
@MagnoliaArt,
That is correct that Wave cannot do inventory tracking automatically. You can however, add inventory as an asset if you want to. If you are looking to track how many of x, y and z you have, you may be better off using excel. The inventory account on the balance sheet would represent the total cost of the** items that are being held for resale.** You can create multiple inventory accounts as well. Since Wave cannot adjust the inventory balance, you would need to do that manually through journal entries.

Can't figure out how to input these items for resale.

Mikeg

@Phil_Barks,
When you say How to input these items> Do you mean the actual inventory account or the balance of inventory?

Phil_Barks

@Mikeg said:
@Phil_Barks,
When you say How to input these items> Do you mean the actual inventory account or the balance of inventory?

I have items in stock. I would like to add the value of my inventory into my calculations. I want to put the resale value of each item into the system as inventory. Have not been able to figure out how to do this. I know I will have to manually update these numbers.

Mikeg

@Phil_Barks,
Inventory should be carried on the books at cost. Normally, when a business makes a purchase of items for resale they would debit inventory and credit cash or accounts payable. However, Wave is not able to track inventory like that. I usually have clients just post all purchases as an expense. At the end of the year we adjust inventory to the correct amount by either debiting or crediting inventory and offset purchases. Year 2 begins with the ending inventory on the balance sheet from Year 1 and all purchases are expensed. At the end of Year 2 we adjust to the amounts on hand. In your case, you would debit inventory and credit purchases or if you contributed the inventory you would credit Owners Capital.

GeorgiaDRS

Mike,
I have a similar question, hoping you can help me out.
I have purchased a series of rugs for an online rug shop. I paid for this inventory out of my own savings, however right now the line item for "owner investment/drawings" does not reflect the cost of the inventory -- it only reflects the other operating costs that I have covered out of pocket as I have gotten the business going (branding expenses, website design, etc.).
Should the cost of inventory not-yet-purchased AND the cost of inventory already sold be reflected somehow in my total investments, or is it typical for this to only show up as an asset within the accounting software? If it should be reflected in my total owner investment, how can I add it to wave?

Mikeg

@GeorgiaDRS,
So if you purchased inventory and then the business sold it, receiving the cash, you make a journal entry to reflect the cost of the sale. Example: You purchased with you own funds 3 carpets and paid 250 each. All three were sold.
Debit purchases 750
Credit owners equity 750
Same as above except you only sold 2 and are still holding one
Debit Inventory 250
Debit Purchases 500
Credit owners equity 750
For my own clients that hold inventory, we do not regularly adjust inventory. Just at year end. All items that the business purchases and held for resale get categorized to Purchases. At the end of year you'll look around to see how many carpets and their cost. At that point you would debit inventory and credit Purchases for the cost on hand. That will reflect the correct balance sheet and the cost of sales has been corrected i.e. Purchases since some of the items purchased were not sold by year end. Hope that helps
Also not that you would not post "not yet purchased" items.