Landed Costs in QuickBooks premier | The #1 Amazon and Quickbooks Integration.

Introduction

This tutorial will guide you through the process of calculating and managing landed costs in QuickBooks Premier, especially for those who purchase products from overseas, such as from China. Understanding how to add shipping and other fees to your product costs is crucial for accurate inventory management and financial reporting.

Step 1: Understand Landed Costs

Landed costs refer to the total cost of acquiring a product, including the purchase price, shipping fees, and other expenses. This ensures that your inventory reflects the true cost of goods sold.

• Example scenario:
  • Product cost: $1
  • Shipping cost: $2
  • Total landed cost: $3

Step 2: Entering a New Bill

To begin, you need to enter a new bill for shipping. Follow these steps:

1. Open QuickBooks and navigate to the Vendor section.
2. Click on Enter Bills.
3. Fill in the details:
   • Vendor name (e.g., Always Forwarding).
   • Enter the bill amount for shipping (e.g., $2500).
4. Select the appropriate expense account (e.g., Freight).

Step 3: Allocating Shipping Costs to Products

You have two primary methods to adjust product costs to include shipping expenses.

Method 1: Directly Adjusting the Bill

1. After entering the bill, return to the Product section.
2. Select the item you want to adjust (e.g., Item 1).
3. Calculate the new product cost:
   • Original product cost: $1
   • Add the shipping cost per item (e.g., $2).
   • New cost will be $3.
4. QuickBooks may prompt you to adjust the product cost automatically.

Tip: This method keeps your bill total intact (e.g., $600 for the vendor).

Method 2: Using Inventory Adjustments

If you prefer or need to use the inventory adjustment method:

1. Go to Inventory and select Adjust Quantity/Value on Hand.
2. Input the adjustment date.
3. Choose the item to adjust (e.g., Item 1).
4. Set the adjustment type to Total Value.
5. Input the new total value:
   • Original value: $100
   • Total shipping cost: $2500
   • New total value: $2600.
6. Select the adjustment account (should match the expense account used for the bill).
7. Click Save & Close.

Practical Tip: Make sure the adjustment account is the same as the one used for the shipping bill to maintain accuracy in your financial records.

Step 4: Review Your Adjustments

After you’ve completed the adjustments:

1. Run a Profit and Loss Statement to verify your adjustments.
2. Ensure the shipping bill reflects in your reports and that the inventory cost has been updated correctly.
3. You should see the shipping expense adjusted to zero and the product cost updated to reflect the new landed cost.

Conclusion

In this tutorial, you learned how to calculate and manage landed costs in QuickBooks Premier by either adjusting the bill directly or using inventory adjustments. Both methods help ensure your inventory values are accurate, which is essential for effective financial management. As a next step, consider exploring the new features in QuickBooks for landed costs if you're using the latest versions, as they offer enhanced functionality for managing these calculations.