Peachtree Maintain Inventory Items and Last Unit Cost

Peachtree Inventory will keep track of the last unit cost of products you buy for resale - whether you keep these products in inventory or they are bought for specific jobs. To set this up, you'll need to create a new inventory item, using the MAINTAIN INVENTORY ITEMS window. The most important field in this window is the ITEM CLASS. Choose STOCK ITEM if you want to be able to track the most recent price paid. By choosing STOCK ITEM, you are telling Peachtree that when this item is purchased, it's price is to be recorded in the LAST UNIT COST field on the inventory screen. This feature allows the operator to quickly and easily look up what was paid for that item.

Notice that there are three general ledger account fields on the MAINTAIN INVENTORY ITEMS window: GL SALES ACCT, GL INVENTORY ACCT, and GL COST OF SALES ACCT. For a STOCK ITEM, none of these fields can be left blank, so let’s figure out what to put into them. To decide what to put into these fields, let's start by looking at the example of a purchase. Whenever inventory is purchased using TASKS/PURCHASES RECEIVE INVENTORY, the GL INVENTORY ACCT field in the Inventory Screen will be increased. Since this is exactly what we want, we'll put our Inventory Account # here: GL INVENTORY ACCT = our Inventory Account #.

Now lets look at what happens when an inventory item is sold using TASKS/SALES INVOICING. The GL SALES ACCT is increased, the GL INVENTORY ACCT is decreased, and the GL COST OF SALES ACCT is increased. In typical inventory situations this is exactly what we want, so we'll fill in the fields as would be expected: GL SALES ACCT = our Sales Account #, GLINVENTORY ACCT = our Inventory Account #, and GL COST OF SALES ACCT = our Cost of Sales Account #.

- Purchasing example: Accounts Payable Cr $80.00 and Inventory Dr $80.00.
- Selling example: Accounts Receivable Dr $100.00, Sales Cr $100.00, Inventory Cr 80.00, and Cost of Sales Dr 80.00.

Choosing the GL accounts as above is fine for many users, but other users have items they buy, not for inventory, but for particular jobs. When these items are purchased the Inventory Account is not increased, instead Purchases Expense is increased. This is not a problem, it just means that we will set up the Peachtree Inventory Screen a little differently. Where we would have entered our Inventory Account #, we'll enter our Purchases Expense Account # - so GL INVENTORY ACCT = Purchases Account #. Now, when this item is bought using TASKS/PURCHASES RECEIVE INVENTORY, the Purchases Expense account will be increased instead of the inventory account.

If you don't carry an inventory, you may not have a Cost of Sales Account in your chart of accounts. If this is the case you may want to also use the Purchases Expense account in the GL COST OF SALES ACCT field. We’re left with the following: GL SALES ACCT = Sales Account; GL INVENTORY ACCT = Purchases Expense Account; and GL COST OF SALES ACCT = Purchases Expense Account. Most of this is not critical because we will not be selling the product as an individual line item on the Sales Invoice and this means that the GL SALES ACCT and GL COST OF SALES ACCT fields will not be affected when the sale is made.

- Purchasing example: Accounts Payable Cr $80.00 and Purchases Expense Dr $80.00.
- Selling example: No effect. We don’t “sell” this item, since it is always sold as part of a larger package.

Finally, make sure you are getting proper figures on your Income Statement and Balance Sheet. Set the period to the month ahead and print the Income Statement and Balance Sheet. Now do a test purchase and sale involving your inventory item and a larger project if you have these. Be sure that the Income Statement shows the Purchase Account, Sales Account, and Cost of Sales Accounts being used properly. Also be sure the Balance Sheet shows the inventory account being increased and decreased by this process as desired or if you have the case of products that are not inventoried, be sure that the Inventory stays the same or is not listed.