QuickBooks and Purchases

QuickBooks Purchases as in accounting is buying by cost, inventory in a particular time period for sale in a business. It is an expense therefore should be included in companies income statement under cost of goods sold (COG). Purchases could be the raw materials, or goods for retail trading.When you need to order items from a vendor, to process item purchases from vendors you fill out the QuickBooks purchase order form.  When you use purchase orders, QuickBooks tracks which items you have on order and when they are due to be received.

How to Process Purchases from Vendors in  QuickBooks

The basic rule of thumb is to use a purchase order when you are ordering items.  Use other QuickBooks forms when you buy or receive items that you never had an order.Use this form: Purchase Order when you are: Ordering items that you’ll receive and pay laterUse this form: Item Receipt when you are: Receiving items with the bill to arrive laterUse this form: Bill when you are: Receiving items and a bill together with no initial purchase order check or credit card. Paying for and receiving items at the same time, such as for over-the-counter purchases.

Steps of filing a purchase order

When you use purchase orders to buy inventory items, QuickBooks keeps track of which items are on order so you’ll know when they’re due to be received.  You can also use a purchase order for non-inventory items for example, to order office supplies for your business.Display the purchase order formFrom: The Activities menu  Do this: Choose create purchase ordersFrom : The purchase orders list Do this: Choose new from the purchase order menu buttonFrom : The Navigator Do this: Click the purchases and vendors tab.  Then click purchase orders in the flowchart.

• In the top part of the form, enter the vendor, date, PO number, vendor’s address and your ship to address
• (Optional) Enter a class for this transaction
• Fill in the line item area by entering the items you are ordering
• (Optional) document the purchase order enters a brief message in the message field. Fill in the memo field at the bottom of the window.  You can enter up to 4095 characters
• Record the purchase order

To record the purchase order and then write another click next. To record the purchase order and close the window, click OK.

How to receive items on order

When you receive items you have ordered, you can

• pay by check or credit card – if you are buying items on the spot
• Enter an item receipt – if you received the items without the bill
• Enter a bill – if you received the items with a bill.

Whether you use purchase orders or not, there are several ways to record inventory items you receive depending on how you for them. When you pay for and receive items on the spot, you can use either the check or the credit card form to record the purchase.

• From the activities menu, choose one of the following

Choose : Write checks If you: wrote a check or paid with cashChoose : Enter credit  If you: Paid by creditChoose : Card receipts If you: Fill in the check or credit card form in the top part of the window

• How to fill in the check form
• How to fill in the credit card form
• Click the items tab
• Did you write a purchase order for the items?

If : Yes Do this: Click select PO and select the Pos that contain the items you are receivingIf : No Do this : Enter the items in the detail area more detail

• (Optional) enter any addition expenses, such as sales tax. Click expenses. For each expense, enter the amount and relevant expense account in the detail area of the expense tab.
• Record the transaction

To record the transaction and then enter another, click next. To record the transaction and close the window, click OK

Receiving items and getting a bill later

When you receive items and get the bill later, you enter information into QuickBooks in two steps. First, you create an item receipt to let QuickBooks know you received the items.  Second, you enter the bill when it arrives.

How to create an item receipt

• From the activities menu, choose inventory
• Choose receive items
• Enter the name of the vendor from whom you received the items
• Did you write a purchase order for the items

If: Yes Do this: Click select PO and select the Pos that contain the items you are receivingIf: No Do this: Enter the items in the detail area more detail

• Record the item receipt- To record the item receipt and then enter another, click Next; to record the item receipt and close window, click OK.

How to enter a bill when you receive it

• From the activities menu, choose inventory
• Choose enter Bill for Recorded Items
• In the Receive Bill for items windows, enter the vendor name in the Vendor field and press tab
• Click the item receipt associated with this bill and then click OK.

QuickBooks changes the item to a bill

• If necessary, change the date shown on the bill 9the date shown is the date you entered the item receipt.
• In the detail area of the bill, correct any costs or amounts if necessary.
• (Optional) enter any additional expenses, such as freight charges or sales tax

Click Expenses- For every expense you key in  the amount,  and a relevant expense account in the expenses tab

• fill in the vendor’s terms
• Be sure the amount shown in the Amount Due Field equals the total on the bill
• Record the bill

To record the bill and then enter another, click Next. To record the bill and close the window, click OK

How to receive items with bill

If you receive items with bill, enter the receipt of the items and the bill at the same time in a single step

• From the activities menu, choose inventory
• Choose receive items and enter bill
• Fill in the bill form in the top half of the window
• (Optional) enter a memo about the bill

The memo you enter will appear on reports that include the bill.  If you pay the bill by check, and you did not enter an account number when you set up the vendor’s record.  QuickBooks puts the memo in the memo field of the check.  If you did enter an account number, the account number appears in the memo field of the check.

• Click the item tab
• Did you write a purchase order for the items/

If: Yes Do this: Click select PO and select the Pos that contain the items you are receiving more detailIf: No Do this: Enter the items in the detail area. More detail

• To enter shipping charges or taxes not associated with any one item, click the expenses tab.

Key in each charge, fully associated with the correct expense account

• Record the bill.

To record the bill and then enter another, click Next. To record the bill and close the windows, click OK

How to enter bills in QuickBooks

If you receive a bill, you use QuickBooks bill form to record the transaction.  You can record bills for expenses such as utilities or office supplies, or for items you’ve ordered and received from vendors.  When you enter a bill, QuickBooks automatically posts the amount to the correct expense account and updates your company’s balance with the vendor who sent the bill

Step by step process

If you use QuickBooks accounts payable, you will get the most benefit if you enter bills as soon as you receive them.  That way, your cash flow reports will be up-to-date, and you won’t run the risk of setting bills aside for later and forgetting about them.When you enter  bills, they can be : -

• Expenses you track through expense accounts
• Items you track through your item list

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