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FROM: Jim Bramer Retired CPA-Auditor
QuickBooks (TM) (QB) FILE: 0635-02/qbb
RE: QB & BookStore (BStore) at a Ministry Originated in April 2001
Below is a hypothetical Online Email thread between any one of the following MFTeam members: PAT (Ministry Chief Executive), LEE: (Ministry Volunteer Treasurer), or FRAN: (Ministry Computer Bookkeeper) and Jim@bcidot.org
We have a Christian Bookstore (BStore) that is a part of our Ministry. As you know, Jim, we use the QuickBooks (TM) (QB) accounting system and we want to effectively use QB features to buy and sell such merchandise (mdse). Please give us some tips along these lines from your perspective.
OK, whenever someone buys merchandise (mdse) and then increases the price (marks it up) for sale to applicable buyers, there are some issues that you must deal with. Since a BStore budget is unique, the first thing, obviously, is to know if the BStore is under financial control and making ends meet. This means that you must manage your Inventory and have assurance that the price you are charging is enough to pay the bills, etc. Also there are sales/Use tax issues in some states. In Calif, for example, if you buy something to sell you do not pay sales tax -- or you collect the sales tax from the customer. But if you use it internally, you need to pay Sales/Use tax etc.
Another thing that we find is that portions of the BStore Inventory is used in other parts of the Ministry and we need to properly account for such matters whereby the BStore is relieved of that expense and it is transferred to budget line items within the using Ministry Department. How is this done within QB?
Before I answer that, please go to 0101 and learn about a Ministry Scrip Store. In a Scrip Store you must maintain virtually daily records of exactly what is in Inventory for sale and then regularly reconcile to that shown by QB Inventory records. That is NOT necessary at a BStore as it is usually sufficient to have only a "once a year" physical inventory of unsold mdse priced at cost and then adjust the recorded Mdse Inventory asset account accordingly.
So to answer your questions, a record is kept of what the BStore has paid for mdse utilized internally by other Ministry Departments. For example, let's say that $200 (this is at cost, not sales price) of Mdse was used by Department A for this past month. At the end of the month, It is a matter of removing the $200 from the BStore Mdse Inventory asset account and charging it to Ministry Department A.
OK, I think I grasp that. Please share some other QB accounting features for a Ministry BStore.
BStore QB accounts involve the following:
Mdse Cost of Sales
Let's suppose that the beginning Merchandise (Mdse) Inventory at cost was $5,000 and it appears as Mdse Inventory Asset account.
Hypothetical BStore Mdse acctg tranx are:
The Acquisition Cost of New Mdse of $1,500 goes to this QBPro2001 Mdse Inventory Asset account. DO NOT use a Mdse Purchase Expense account
Mdse Sales amounted to $1,000
The amount of the Cost of Goods sold of $700 is a percentage of the Mdse Sales or you multiply the sales amount by the average cost of sales %, etc -- in this case 70%.
This Cost of Sales of $700 amount increases the Mdse Cost of Sales account and
Reduces the Mdse Inventory Asset account by $700
All Ministry internal uses of Mdse Inventory of $60 are charged at cost to the respective Ministry Expense Accounts and
Reduces the Mdse Inventory Asset account by $60
After these tranx the balance of the Mdse Inventory account is $5,740 (+$5,000+$1,500-$700-$60=$5,740)
Other BStore accounting via QB issues include the following:
> Not use QB Purchase Orders
> Not use QB Items for Mdse (Merchandise) Inventory purposes
> All purchases go to QB Asset account called Mdse Inventory
> Mdse Inventory is increased as a result of writing a check; as it is probably not necessary to use QB features of Bill Processing and Payment
> All sales go to QB Income called Mdse Sales
> You handle charge sales, Accounts Receivable, in the normal QB fashion.
> The Cost of Goods Sold percentage is based on average mark-up of all mdse sold. Example, if all of the mdse was purchased for $70 and sold for $100, the average percentage of mdse sold would be 70%.
That is very helpful, Jim. We will implement your QB BStore accounting system and will let you know if we have questions.
Please Click here for more topics having to do with the use of "QuickBooks and Ministry Fund Accounting" on www.bcidot.org. Click here and go to List of threads (THRDs) at www.bcidot.org This was UPTD: March 09, 2012
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