Build Assemblies and Cost of Goods Sold

To follow up, I looked into whether it was happening for other Assembly Builds and it is, so now I'm just confused why sometimes a Build will only credit the Inventory Asset account, but other times it credits that and debits from COGS account. What compels the system to do this? In this screenshot it's for one Assembly Build, showing the most recent Builds. You can see some Builds are single lines, while others list 3 lines showing the various debits and credits I'm speaking of. Can someone explain please? Thank you!

I'm here to help associate the COGS account with the item, GrimmEricB.

Before building an assembly, you need to review the account used to track the inventory item. The Sales by Item Summary reports provides a recap of all item you've sold, over a period of time.

Please know that there are two additional fields when you create an item. Under the Purchase Information section, select the COGS account to track payments for the item. And, select an income account from the Sales Information area to  track the amount you earn from selling the item.

Then, choose an asset account in the Inventory Information. By default, QuickBooks automatically assign an account in this section. However, you can use a different one whenever you want.

Please refer to this link for additional information: Add, edit, and delete items. Then, click Create an item to learn how to associate accounts to an item.

Additionally, you need to select a COGS and Asset account when creating an inventory assembly to track bill of materials. You can refer to this article to learn how to products you manufacture: Set up your product’s bill of materials.

Upon sharing this, I still recommend consulting your account for specific instructions. Rest assured they can provide more details on which account to use when tracking your items.

I'm adding these articles to learn more about accounting side when you add an item in QuickBooks:

• Track the products you manufacture
• Understand inventory assets and cost of goods sold tracking.
  
  

Keep me posted if you have follow-up questions about this. I'll be right here to provide the information that you need.

The extra CoGS journal entries that occur sometimes when you do a build assembly are frustrating because it's not very clear on why QB would do that. You know that your GL accounts ( Asset, CoGS, Sales ) are correct for the Item, but why is QB adding an extra journal entry on the Build Assembly for CoGS. I wonder if the extra CoGS entry is a difference between the Cost of the BOM item and it's average cost? The extra CoGS entry on the Build Assembly seems like the result of QB reconciling some kind of fractional averaging issue by adding the extra CoGS journal entry. QB is deciding that not enough dollars have been accounted for in the current set of Build Assembly costs, thus QB adds the CoGS journal entry. 
The Transaction Journal report should simply be the result of the number of raw materials used times the average cost, but some times it seems like QB is adding that extra journal entry for CoGS. There should be NO CoGS entries in the Build Assembly function, but QB is reconciling automatically a fractional difference in averaging. I would like to see the algorhythm in QB for Build Assembly. 

I have a similar issue, and I read through all the comments (at least up to today) and none of those comments seem to solve the issue, however I gleamed pieces of helpful information and I believe I have solved the issue, let's find out. (Side note, I am using QB Desktop Enterprise (Silver-I think), Manufacturing and Wholesale. I have lots of Items that I use to build lots of Assembly items.)

I've received all the inventory required to Build my Item Assembly. All of the inventory was recorded to the appropriate Asset accounts for what I paid for them. In doing this, all of the Average Costs of the Items I received have also updated. Therefore, I have a difference between the cost of what I received, and the Average Cost of the Item. (For example, I received one of the items at $35.00 each, and the new average cost is now $35.27.) I also have a Service of $5.00 on my BOM for my Assembly Item.

I now Build my Assembly using the appropriate function in QB. It assigns a Number to the Assembly, 13099 and I pull a Transaction Detail by Account, filtered to Transaction Type "Build Assembly", and filtered to "Number" 13099. I can now see the JE booked for this build assembly. The asset accounts for the individual items are Credited for the Average Cost of $75.95, my Item that was built is debited for $80.95 into the appropriate asset account. That leaves a difference of $5.00, my Service Item. This is booked as a Credit to the COGS account set up with the Service Item. This JE is now in balance, but wait, the issue that we all complain about, I have another Debit in the COGS account of the New Item and a Credit in the COGS account of the New Item for $1.22. This is the difference between the Cost that I recorded the Inventory at when I purchased it (for example the $35.00 for the item I mentioned above), and the Average Cost (which is $35.27 for that same item) that QB calculated when I recorded the purchase. (Remember, my example amount of what I received in inventory was just for 1 of the many inventory items in my Assembly Item. So, my example of $35.00 is for just that item, and $1.22 is the total of the difference for all my items in the Assembly Item.)

So there it is, the annoying COGS entry that seems to inflate COGS values is moving actual cost from the asset account to average cost on the P&L. (Notice it does this for the Service account, even if it is not sold yet.)

The best way I've come up to "minimize" this crazy JE is to create a new Item each time I receive the same product from the same vendor but with a different price. I do this by defining an Item Number as "type-model-coating-vendor(2-digit abbreviation)-dollar(rounded up to whole dollar)". Then I use the "Where Used" function in the "Activities" section of the Item to update all of the Item Assemblies for my builds. I hope this helps.

Take a look at the average cost for the items in the build assembly. Look at the Item on the Item List and note the average cost. The build assembly journal entry attempts to balance to that cost amount. The small CoGS amounts you see when creating a Build Assembly might match that difference. Please let me know what you discover!