Production Syncing to QBO

Syncing Work Orders and Disassembly's to QBO

When syncing inventory with QuickBooks Online and using Work Orders and Disassembly's we are often left with random COGs amounts. The issue is QuickBooks Online does not allow for the negative qty line items. So using our normal method of negative quantity components and positive quantity finished good had to be altered to account for this. To get around this we are using the following Workflow: 

Part 1: QuickBooks One-time setup

Order Time will Create Two Accounts and a Vendor (The Vendor part has not changed)

Clearing Account

Name: OT Production Clearing

Account type: Other Current Assets

Detail type: Other Current Assets

Variance Account:

Name: OT Production Variance

Account type: Cost of Goods Sold

Detail type: Other Costs of Services – COS

Subaccount: Cost of Goods Sold

Order Time will create a Vendor

“NC WorkOrder Internal” (Required for the $0 bill described further below)

Part 2: Finished Product from Component

In the below example, The QB calculation of costs for the components are not matching the FIFO costs of Order Time. Therefore we are left with a variance. Below describes how that will be handled:

• New Bill

Vendor: Internal Production

Add Category Line: Production Clearing, Amount −4.50

Add Category Line: Expense Account on the “Labor” Item, Amount -3

Add Line Item for: Finished Product, Qty 1, Rate 7.00, Amount 7.50

Bill No./Memo: WO-1222 (reference the Work Order here for easier reconciliation)

Save, this creates a $0 Bill

• New Inventory Adjustment

Inventory adjustment account: Production Clearing

Reference no/Memo: WO-1222 (reference the Work Order here for easier reconciliation)

Add Line Item: Component, Change in Qty -1

• Chart of accounts: Production Clearing

The register will show a balance of -0.50

Future Bills/Inventory Adjustments will continue to record all variance in this Clearing Account.

Part 4: Month end (frequency determined by user)

• In QuickBooks, record a journal entry to Clear out the Clearing account using the Variance account as the offset. 

- Debit the Production Clearing account for the balance (e.g. 10.20)

- Credit the Production Variance account for the balance (e.g. 10.20)

(Reverse if the balance is positive)

This will move the total variance to the Production Variance account, which is a sub account of COGS, Users can use this to account for the variance between Order Time/QuickBooks. The Production Clearing account is then cleared out/ready for the next month.