Introduction

There are two ways to put Product information into Checkout. The first is to manually enter Products. See Add / Create Products for details. The second is to import Product information from a tab-delimited text file (see Import Products for details).

Product quantities and values (costs) are usually entered with Purchases, although they can be entered as part of the Product information import, or with Stock Corrections. When Products are Purchased in Checkout, Checkout will debit the Stock account (increase), and credit the Creditors account (increase). Normally these accounts can map to Inventory (asset) and Accounts Payable accounts, respectively, in your accounting software. However, in your accounting program (AccountEdge or QuickBooks), you may want to create another Accounts Payable account, named something such as Checkout Accounts Payable, and map the Checkout Creditors account to the new account. Then after importing your Checkout transactions into your accounting program, you can create Bills, debiting the Checkout Accounts Payable account, and crediting the Accounts Payable account. Using this method will allow you to manage the payment and payment terms of the Checkout purchases.

Regardless of that account change, your accounting program will have correct inventory balance recorded in its inventory asset account. Future sales in Checkout will create transactions, removing value sold from the inventory asset account and posting the value to the mapped Cost of Goods Sold account. Therefore, the inventory asset account in your accounting program will accurately reflect the value of Products in Checkout.

When Product quantities and values are imported as part of Product information imports, the transactions are the same as the Stock Correction transactions. In both cases, a transactions will be recorded, increasing the Stock account, and increasing another account. This other account by default, is a Shrinkage and Spoilage expense account. When the transactions are imported into your accounting program, the inventory (asset) account value will correctly be increased, but the (shrinkage / spoilage) expense account will be decreased. As a result, when sale transactions are imported into your accounting program, the inventory will be correctly decreased by the cost of sales amount, and the cost of sales account will be increased by the cost of sales amount.

Exchanging Product Information

Exchanging item (product) information between AccountEdge and Checkout has become commonplace. One scenario, which was discussed above, includes the purchase of products in Checkout, where the purchase payment is made through the accounting program. In another scenario, customers purchase items in AccountEdge, and transfer the assets to Checkout. A variation of this scenario is the case where components are purchased and sellable products are built, with these steps being tracked in AccountEdge, then the sellable products are transferred to Checkout. The latter two scenarios are discussed below.

• AccountEdge Purchases to Checkout Sales
• AccountEdge Build Items to Checkout Sales

AccountEdge Purchases to Checkout Sales

In this scenario, AccountEdge is used to track the purchase of products and the related expenses. Vendor bills are paid from Accountedge, thus affording the ability to track terms and manage cash flow.

Requirements

AccountEdge and Checkout will need to be on a single machine, or on machines on the same LAN. For Checkout – AccountEdge configuration, Checkout will need access to AccountEdge Pro or AccountEdge Network Edition on a Mac. For day-to-day operation, a Checkout-exported file of journal entries can be copied to the AccountEdge machine using a shared drive, flash drive, or other medium. Thus, AccountEdge can be run on a WIndows machine, but the user will need to copy the company file to a Mac, and use a trial version AccountEdge on the Mac to configure Checkout.

Implementation

AccountEdge

• Although chart of accounts is user-specific, a manufacturing chart of accounts is suggested. This chart of accounts has income, cost of sales and inventory asset accounts for both raw materials and finished goods.
• Create item entries for the products; these are sold, inventoried and bought
• Create card file entries for vendors
• Purchase products
• Indicate the transfer of products to Checkout
  • Use Adjust Inventory transactions
  • Indicate the quantity being transferred as a negative quantity
  • Use the item's COS account in the account field
  • AccountEdge will fill in the other fields — make a note of the unit cost
  • The result will be the removal of finished goods items from inventory, with a debit to the COS account (increasing COS) and a credit to the inventory account (decreasing inventory value)
• All other reporting is performed as usual

Checkout

• Configure accounts with the AccountEdge company file
  • Map Checkout Stock to the AccountEdge inventory asset account
  • Map Checkout COGS Stock to the AccountEdge COS account
  • Map Checkout Sales to the AccountEdge income account
  • Map Checkout Spoilage to the AccountEdge COS account1
• Create Products representing the AccountEdge products
  • Cost should be the standard cost
• For each AccountEdge-transferred item
  • Perform a Stock Correction
    • Indicate the same number of items removed from AccountEdge, as a positive number
    • Indicate the cost you noted from the AccountEdge Adjust Inventory transaction — cost must match AccountEdge
  • The result will be the addition of quantity to Checkout, with a debit to the Checkout Stock account (increasing stock value), and a credit to the Checkout COS account (reducing its value)2
• Perform sales in Checkout
• At the end of a period (day, week, etc), export ledger entries and import into AccountEdge3
• All other reporting is performed as usual

Optional

AccountEdge

Often AccountEdge users want the value of products to include shipping and other charges (the value should be the entire cost of the material's replacement). These adjustments can be addressed in AccountEdge.

If expenses need to be added to products, they should be added before making the Adjust Inventory transaction to transfer goods to Checkout.

Adding Shipping Charges to an item

• Determine the expense account used to record the shipping charges
• Create a Journal Entry (Record Journal Entry), transferring the shipping expense to the inventory value
  • Debit the item's asset account with the shipping charges (increase)
  • Credit the shipping expense account with the charges (decrease)
• Create an Adjust Inventory transaction to increase the item's inventory value
  • Indicate the shipping cost in the amount field, as a positive value
  • Indicate the item's inventory account in the account field (this will post a debit and credit to the inventory account)

Adding Expenses to an item

• Determine the expense account used to record the expense (could be wages, employer wage expense, utilities, etc.)
• Create a Journal Entry (Record Journal Entry), transferring the expense to the inventory value
  • Debit the item's asset account with the expense (increase)
  • Credit the expense account with the expense value (decrease)
• Create an Adjust Inventory transaction to increase the item's inventory value
  • Indicate the expense in the amount field, as a positive value
  • Indicate the item's inventory account in the account field (this will post a debit and credit to the inventory account)

Notes:

1. If mapping the Spoilage account to the COS account is not a good solution for a particular customer, then the Spoilage account can be mapped to a Shrinkage and Spoilage account, as is typically done. After performing the stock adjustment in Checkout, the user will export the ledger entries, and import them into AccountEdge. Once completed, the user will need to record a journal entry to move the stock adjustment value from the Shrinkage and Spoilage account (credit) to the finished goods COS account (debit). The value indicated in this transaction will be positive.
2. The result will be a "negative" COGS. When the journal entries are imported into AccountEdge, this negative value, which should be equal to the positive value made as a result of the AccountEdge Adjust Inventory transactions, will result in a COS account value of zero. The positive Stock value will be imported to the Finished Goods inventory asset account, increasing its value. Thus, AccountEdge will show inventory value and no COS values until sales are made. (If the user wanted to use locations, a location can be set for "Store", POS, etc., and the FInished Goods can be transferred to the location.)
3. When sales are made in Checkout, the products will be removed from "inventory," a debit will be made to the COGS Stock account, and a credit will be made to the Stock account. When the journal entries are imported into AccountEdge, the COS account will be debited and the Finished Goods asset account will be credited. As a result, AccountEdge reports will always show accurate information.

AccountEdge Build Items to Checkout Sales

In this scenario, AccountEdge is used to track the purchase of raw materials and the expenses required to create finished products. The expenses, which could include shipping, labor, other materials, can be incorporated into the cost of creating the finished products. Accountedge is used to track vendor payment terms, payments and cash flow. The finished products can then be sold through Checkout POS, and the resulting sales journal entries would be imported into AccountEdge. Thus, at the end of a period, AccountEdge can report on sales, cost of sales, expenses, and payroll.

Requirements

AccountEdge and Checkout will need to be on a single machine, or on machines on the same LAN. For Checkout – AccountEdge configuration, Checkout will need access to AccountEdge Pro or AccountEdge Network Edition on a Mac. For day-to-day operation, a Checkout-exported file of journal entries can be copied to the AccountEdge machine using a shared drive, flash drive, or other medium. Thus, AccountEdge can be run on a WIndows machine, but the user will need to copy the company file to a Mac, and use a trial version AccountEdge on the Mac to configure Checkout.

Implementation

AccountEdge

• Although chart of accounts is user-specific, a manufacturing chart of accounts is suggested. This chart of accounts has income, cost of sales and inventory asset accounts for both raw materials and finished goods.
• Create item entries for the raw materials
  • These are bought, inventoried and optionally sold1
• Create item entries for the finished goods
  • These are sold, inventoried and optionally bought2
  • Indicate the Auto-build inventory components required to build the finished goods
• Create card file entries for vendors
• Purchase raw materials
• Use the Auto-build feature to build finished goods
  • The cost of the finished goods will be the sum of the cost of components
• Indicate the transfer of finished goods to Checkout
  • Use Adjust Inventory transactions
  • Indicate the quantity being transferred as a negative quantity
  • Use the item's COS account in the account field
  • AccountEdge will fill in the other fields — make a note of the unit cost
  • The result will be the removal of finished goods items from inventory, with a debit to the COS account (increasing COS) and a credit to the inventory account (decreasing inventory value)
• All other reporting is performed as usual

Checkout

• Configure accounts with the AccountEdge company file
  • Map Checkout Stock to the AccountEdge Finished Goods inventory asset account
  • Map Checkout COGS Stock to the AccountEdge Finished Goods COS account
  • Map Checkout Sales to the AccountEdge Finished Goods income account
  • Map Checkout Spoilage to the AccountEdge Finished Goods COS account3
• Create Products representing the AccountEdge Finished Goods
  • Cost should be the standard cost
• For each AccountEdge-transferred item
  • Perform a Stock Correction
    • Indicate the same number of items removed from AccountEdge, as a positive number
    • Indicate the cost you noted from the AccountEdge Adjust Inventory transaction — cost must match AccountEdge
  • The result will be the addition of quantity to Checkout, with a debit to the Checkout Stock account (increasing stock value), and a credit to the Checkout COS account (reducing its value)4
• Perform sales in Checkout
• At the end of a period (day, week, etc), export ledger entries and import into AccountEdge5
• All other reporting is performed as usual

Optional

AccountEdge

Often AccountEdge users want the value of raw materials to include shipping and other charges (the value should be the entire cost of the material's replacement). Also, the value of the finished goods will comprise the value of the raw materials, and the expenses of creating the finished goods. These adjustments can be addressed in AccountEdge.

If expenses need to be added to raw materials, the adjustment should be done before finished goods are built. If expenses need to be added to finished goods, they should be added before making the Adjust Inventory transaction to transfer goods to Checkout.

Adding Shipping Charges to an item

• Determine the expense account used to record the shipping charges
• Create a Journal Entry (Record Journal Entry), transferring the shipping expense to the inventory value
  • Debit the item's asset account with the shipping charges (increase)
  • Credit the shipping expense account with the charges (decrease)
• Create an Adjust Inventory transaction to increase the item's inventory value
  • Indicate the shipping cost in the amount field, as a positive value
  • Indicate the item's inventory account in the account field (this will post a debit and credit to the inventory account)

Adding Expenses to an item

• Determine the expense account used to record the expense (could be wages, employer wage expense, utilities, etc.)
• Create a Journal Entry (Record Journal Entry), transferring the expense to the inventory value
  • Debit the item's asset account with the expense (increase)
  • Credit the expense account with the expense value (decrease)
• Create an Adjust Inventory transaction to increase the item's inventory value
  • Indicate the expense in the amount field, as a positive value
  • Indicate the item's inventory account in the account field (this will post a debit and credit to the inventory account)

Notes:

1. The user may want to sell or donate remnants or otherwise have a means to discharge raw materials
2. The user may want to consider the case of having to outsource the building of the finished goods, especially if business is great and really busy
3. If mapping the Spoilage account to the COS account is not a good solution for a particular customer, then the Spoilage account can be mapped to a Shrinkage and Spoilage account, as is typically done. After performing the stock adjustment in Checkout, the user will export the ledger entries, and import them into AccountEdge. Once completed, the user will need to record a journal entry to move the stock adjustment value from the Shrinkage and Spoilage account (credit) to the finished goods COS account (debit). The value indicated in this transaction will be positive.
4. The result will be a "negative" COGS. When the journal entries are imported into AccountEdge, this negative value, which should be equal to the positive value made as a result of the AccountEdge Adjust Inventory transactions, will result in a COS account value of zero. The positive Stock value will be imported to the Finished Goods inventory asset account, increasing its value. Thus, AccountEdge will show inventory value and no COS values until sales are made. (If the user wanted to use locations, a location can be set for "Store", POS, etc., and the FInished Goods can be transferred to the location.)
5. When sales are made in Checkout, the products will be removed from "inventory," a debit will be made to the COGS Stock account, and a credit will be made to the Stock account. When the journal entries are imported into AccountEdge, the COS account will be debited and the Finished Goods asset account will be credited. As a result, AccountEdge reports will always show accurate information.