Account for 3rd Party Landed Costs on Purchases (advanced)
Did you receive a bill for freight from a Vendor other than who you made the Purchase from? If so, you will need to account for these Landed Costs to this 3rd party.
1. Voucher a payment to the original Vendor.
- Enter the Voucher Amount for the PO Line Items for this Vendor just as you would in normal circumstances and then mark the PO Line Items you want to pay.
- In the Adj. Cost column you will account for the 3rd Party Cost for each Line Item. In this example there is a $20 charge from a 3rd Party Freight service that has been distributed manually based on the item's proportion of the total Voucher Amount. [e.g. (150/180)*(2400) + 150 = 166.67]. This Adjusted Cost becomes the actual value of the inventory (landed cost).
2. Account for the 3rd Party Costs
Now we need to account for that extra $20 of cost that we are adding to our PO Line Items. We will do so on the General Ledger tab of the same Voucher.
- You will need to have a Holding Account setup to clear these charges. This should be an expense account and will typically not carry a balance from month to month (just like most clearing/holding accounts) since we will wash this amount when we Voucher the payable to this 3rd Party. In this example I created an expense account called Third Party Charges.
- The amount of this "expense" needs to be a credit to go along with the other $180 worth of liability (credit) we've recorded in the Voucher Amount (payable to the inventory vendor).
- If your Amount Remaining To Distribute is $0.00 then click OK to save the Voucher.
3. Voucher a Payable to the 3rd Party Vendor
So, we vouchered a payable to our Vendor for our Purchase and accounted for the 3rd Party Landed Costs. Next, we also have a bill for the freight so we will need enter a Voucher to pay the 3rd Party.
- Enter the Voucher Amount just as usual.
- Add a new line on the General Ledger tab. Use the same clearing account you used in Step 2.
- This time the $20 amount needs to be a debit to offset the credit amount we charged earlier. This will clear the amount out of this holding account. (note: The actual expense will occur as part of CoGS when you make a sale.)
Click OK to save.