Inventory being sent for processing

Hi @Sabeeh 

First, create a "Dyeing Service" item as a service type. Then, use an inventory adjustment to decrease your raw yarn quantity, offsetting it to a "Work-in-Process" account. Next, record the bill from the dyeing company, allocating the cost to the "Dyeing Service" item. Finally, receive the dyed yarn back by either increasing a new "Dyed Yarn" inventory item or adjusting the "Work-in-Process" account.

Troubleshooting Steps for Recording the Dyeing Process in QuickBooks Desktop:

Step 1: Setting Up the "Dyeing Service" Item

• Problem: You can't find the "Item List" under the "Lists" menu.
  • Troubleshooting: Double-check that you are in QuickBooks Desktop and not QuickBooks Online. The menu structure is different. In Desktop, "Lists" is usually in the top menu bar.
• Problem: You accidentally created an "Inventory Part" item instead of a "Service" item.
  • Troubleshooting: You might need to delete the incorrect item. Go back to the "Item List," find the item, right-click on it, and select "Delete Item." Then, create a new item, making sure to choose "Service" as the type.
• Problem: You're unsure which expense account to link the "Dyeing Service" item to.
  • Troubleshooting: Think about where this cost best fits within your chart of accounts. If you have a specific "Dyeing Expense" account, use that. Otherwise, "Manufacturing Overhead" or "Outsourced Services" are also common choices. If you don't have a suitable account, you can create a new one by typing the desired name in the "Expense account" dropdown and clicking "Add New." Ensure you select an "Expense" type account.
• Problem: The "Rate" field is grayed out or you can't enter a rate.
  • Troubleshooting: This might happen if you haven't selected an expense account. Ensure you've chosen an expense account, and the rate field should become available. You can leave it blank if the cost varies per batch.

Step 2: Removing the Raw Yarn from Inventory (Inventory Adjustment)

• Problem: You can't find the "Adjust Quantity/Value on Hand" option under the "Inventory" menu.
  • Troubleshooting: Make sure you are logged in as the QuickBooks Administrator, as some inventory functions might be restricted to admin users. Also, ensure you have inventory tracking enabled in your QuickBooks preferences (Edit > Preferences > Inventory).
• Problem: You're not sure which account to use for the "Adjustment Account."
  • Troubleshooting: As suggested earlier, "Work-in-Process (WIP) Inventory" is a good choice. If you haven't created it, go to Lists > Chart of Accounts > Account > New. Choose "Other Current Assets" as the account type and name it "Work-in-Process Inventory."
• Problem: You entered the wrong quantity in the "New Quantity" column.
  • Troubleshooting: If the adjustment was recent, you can go back to the transaction (by looking at the "Transaction History" for the raw yarn item or by finding it in the "Inventory Adjustment" register - Lists > Chart of Accounts, then right-click on your WIP account and select "QuickReport") and edit it. If it was a while ago, you might need to create a correcting inventory adjustment.
• Problem: The cost or value of your inventory isn't decreasing as expected.
  • Troubleshooting: Ensure you selected the correct raw yarn item and entered the correct "New Quantity." QuickBooks should automatically calculate the value change based on your item's cost. Check your Inventory Valuation Summary report (Reports > Inventory > Inventory Valuation Summary) to verify.

Step 3: Recording the Dyeing Service Charges (Entering a Bill)

• Problem: You can't find the "Enter Bills" option under the "Vendors" menu.
  • Troubleshooting: Again, make sure you are in QuickBooks Desktop. If you are, check if you have vendor features enabled in your preferences (Edit > Preferences > Accounts Payable).
• Problem: You forgot to select the "Dyeing Service" item in the "Items" tab of the bill.
  • Troubleshooting: Go back to the "Enter Bills" window, select the bill you created, and make sure you are on the "Items" tab (not the "Expenses" tab). Then, select the "Dyeing Service" item in the "Item" column and enter the quantity and cost.
• Problem: The bill amount isn't matching the invoice from the dyeing company.
  • Troubleshooting: Double-check the quantities and rates you entered on the bill against the dyeing company's invoice. Ensure you haven't accidentally entered the amount in the wrong column.

Step 4: Receiving the Dyed Yarn Back into Inventory

• Problem (Option A - New Item): You can't find "Inventory Part" when creating a new item.
  • Troubleshooting: Ensure you select "Inventory Part" as the "Type" when creating the new item for your dyed yarn.
• Problem (Option A - New Item): You're unsure what the "Cost" should be for the new dyed yarn item.
  • Troubleshooting: The cost should ideally include the cost of the raw yarn plus the dyeing service cost. You might need to calculate an average cost per unit. You can look at the value that was in your "Work-in-Process" account for that batch of yarn and divide it by the number of dyed units you received.
• Problem (Option A - New Item): You're using the wrong adjustment account when increasing the quantity of the dyed yarn.
  • Troubleshooting: When you do the inventory adjustment to receive the dyed yarn, the "Adjustment Account" should be the same "Work-in-Process Inventory" account you used when you sent the raw yarn out. This will effectively move the value from the WIP account to your finished goods inventory.
• Problem (Option C - Assembly Build): You can't find "Build Assemblies" under the "Inventory" menu.
  • Troubleshooting: Ensure you have "Inventory and Purchase Orders" enabled in your preferences (Edit > Preferences > Inventory). Also, you need to have created an "Inventory Assembly" item for your dyed yarn first (Lists > Item List > Item > New > Inventory Assembly).
• Problem (Option C - Assembly Build): The Bill of Materials for your assembly item isn't set up correctly.
  • Troubleshooting: Go back to your "Dyed Yarn" assembly item in the Item List, click "Edit Item," and carefully review the "Bill of Materials" section. Make sure your raw yarn item and the "Dyeing Service" item are listed with the correct quantities.