USA Bookkeeping Question

[dench7]

Hello all,

I have a startup company that I am working through and I had a couple bookkeeping questions. It is a very small startup, $20K income/expenses per year.

We buy materials and create products which we either sell or let another company rent them out. How would the recording for this work? Would I need to do raw materials, finished goods and etc? How do you know exactly how much raw materials you have used? How does it work if its rented? Does it go into fixed assets?

I was hoping since we are such a small company, there can be an easier way to do this instead of using inventory accounting.

Any help would be much appreciated!!

 

[BIG E]

You are talking about a multiple phased business.
One is manufacturing to a finished product. So you need to keep inventory costs for materials used and labor costs in manufacturing.
Then when manufacturing is done, total cost of finished goods become Inventory -for Sale (Asset).
When the units are used for rental rather than for sale - then they become fixed assets which become depreciated - so you segregate the cost of those assets and remove them from Inventory-for sale assets. Pick up rental income as you would any other rented asset.

 

[Asha Kanta Sharma]

You need to have software which will take care of all the inventory level accounting. All Raw-Materials Purchased will be an expenses and when these are procesed to a finished product, you have to reduce the all materials consumed and create/increase the Qty of Finished Products. Selling them with a margin will bring profits to cover all direct and indirect expenses.