Archived
05-03-2008, 07:59 PM
====================================
(10/23/2000 7:47:19 AM) Jerry Kalinowski wrote:
I work with a farmer that raises seed wheat and soybeans.After the crops are harvested he wants to transfer inventory into the seed business so he can evaluate profits. What is the best route?
-buy & sell between farm & business or
involve ar and ap?
====================================
Especially if he already has the farm business and seed business set up as separate QuickBooks company files, then buying & selling between the two businesses is probably best.
One advantage, is that if the seed business buys its inventory from the farm business, this makes it essentially follow the retail business inventory model (i.e., it buys wholesale and sells retail)...and so QuickBooks will do a good job of: (1) maintaining a correct seed inventory and (2) recording sales from inventory and (3) accounting for the Cost of Goods Sold.
If profits from the seed business and farm business are both entered on the Schedule F tax form, then be careful income and expense don't get double-counted. For example, be sure "sales" of seed soybeans to the seed business are posted to a separate Non-Tax sales account of the farm business (i.e., an account that you exclude from QuickBooks Tax Report). For example, your account hierarchy might include something like this:
Sales
Grain
Soybeans
Taxable
Non-Taxable
Note that is should also be possible to do this sort of buy/sell activity within one QuickBooks company file (i.e., if the farm and seed business are maintained as one file). One way to do this is by setting up a "dummy" checking account to use for posting the internal sales and purchases. (See the Non-Farm Funds Account discussion on page 243 of our book, The QuickBooks Farm Accounting Cookbook(TM), for ideas on handling this kind of an account.)
Mark Wilsdorf
Flagship Technologies, Inc.
http://www.goflagship.com
(10/23/2000 7:47:19 AM) Jerry Kalinowski wrote:
I work with a farmer that raises seed wheat and soybeans.After the crops are harvested he wants to transfer inventory into the seed business so he can evaluate profits. What is the best route?
-buy & sell between farm & business or
involve ar and ap?
====================================
Especially if he already has the farm business and seed business set up as separate QuickBooks company files, then buying & selling between the two businesses is probably best.
One advantage, is that if the seed business buys its inventory from the farm business, this makes it essentially follow the retail business inventory model (i.e., it buys wholesale and sells retail)...and so QuickBooks will do a good job of: (1) maintaining a correct seed inventory and (2) recording sales from inventory and (3) accounting for the Cost of Goods Sold.
If profits from the seed business and farm business are both entered on the Schedule F tax form, then be careful income and expense don't get double-counted. For example, be sure "sales" of seed soybeans to the seed business are posted to a separate Non-Tax sales account of the farm business (i.e., an account that you exclude from QuickBooks Tax Report). For example, your account hierarchy might include something like this:
Sales
Grain
Soybeans
Taxable
Non-Taxable
Note that is should also be possible to do this sort of buy/sell activity within one QuickBooks company file (i.e., if the farm and seed business are maintained as one file). One way to do this is by setting up a "dummy" checking account to use for posting the internal sales and purchases. (See the Non-Farm Funds Account discussion on page 243 of our book, The QuickBooks Farm Accounting Cookbook(TM), for ideas on handling this kind of an account.)
Mark Wilsdorf
Flagship Technologies, Inc.
http://www.goflagship.com