Dx5+QBO: Inventory Transactions

A detailed guide to what's happening with each Dx5 user action:

1. Purchase Orders

Action: PO Creation

• DISTILL x 5: A PO is created in anticipation of inventory receipt from a specified supplier. No price information is captured at this point, though the system predicts the total cost based on the default unit cost.
• Quickbooks: No action

Action: Full PO Receipt (Note: the QBO integration will not allow for multiple invoice/document numbers, therefore partial PO receipts will not be pushed. Once the "Mark as Closed" option is selected upon PO receipt, the receipt will be pushed to QBO as entered.)

• DISTILL x 5
  
  • The PO receipt captures the actual unit cost as presented on the supplier’s bill of lading.
  • No more than the quantity specified on the PO may be received; in such cases, the user must edit the PO before receipt.
  • Inventory is added to the total of that item, and the average unit cost is recalculated to account for the additional units at their purchase price.
  • Freight Options
    • Count freight as an operating expense. Enter the freight cost directly into QuickBooks, not Distill x 5.
    • Divide freight by the number of weight units received. Divide the freight charged by the number of units received, then add that number to the per-unit cost of each material.
    • Assign it to one inventory item. Divide the freight charged by the number of units of that material received, then add it to the per-unit cost of that material.
• Quickbooks
  • A bill is created to reflect the total owed to the supplier
  • Inventory is received in its appropriate account (Inventory:Ingredients or Inventory:Supplies)
    • Inventory will always appear with a value of $1.00 per unit and the quantity necessary to reflect the total value of inventory. For example, if 500 units are received at $0.27/unit ($135.00), Quickbooks will display a receipt of 135 units at $1.00/unit.
    • QBO does not support variable unit costs; to properly calculate batch cost, DISTILL x 5 should serve as the primary inventory manager with QuickBooks holding only the value of inventory, rather than the quantity. 

2. Inventory Adjustments

Please Note: Adjustments should only be used in the case of found/lost inventory, as there is no compensatory cost transaction for these transactions. Adjustments will impact your average unit cost.

• DISTILL x 5
  • The quantity of inventory on hand will be increased or decreased in accordance with the action taken.
    • Action: Increase
      • The quantity of units are added, with existing average unit cost adjusted to accommodate the additional units.
      • For example, if 500 units are on hand at $0.27 each, and an adjusting entry is logged for +100 units, the new average unit cost will be $0.225.
    • Action: Decrease
      • The quantity of units are depleted, with existing average unit cost adjusted to accommodate the additional units.
      • For example, if 500 units are on hand at $0.27 each, and an adjusting entry is logged for -100 units, the new average unit cost will be $0.3375.
• Quickbooks: You may see a corresponding transaction push to a COGS:Shrinkage account. If you see this, feel free to remove that transaction. This is a current limitation of the QuickBooks Online platform as it relates to manual inventory adjustments.

Inventory Usage: Please see Dx5 + QBO: Operations Batch Actions - Part I