QuickBooks | The Landing Cost
Software: QuickBooks accounting software
Landing cost is costs such as insurance, freight, etc., which incurred during importing of goods. Some accountants may expense the landing cost off, but some may prefer to cost the landing cost into the product unit cost.
Assuming the actual unit cost for product A1001 is at $100 each and A2002 is at $200 each. You estimated that the landing cost is at 10% of the actual product cost When entering the bill in QuickBooks, you may use the “actual cost + landing cost” instead of “actual cost” alone. That is, $110 each for A1001 and $220 each for A2002. This will increase the actual bill by 3,000 (assuming 100 pieces each was to be purchased).
Next, you add an additional item, landing cost, and enter negative 3,000 in the amount field. This will reduce 3,000 from the bill and return to the actual amount due to the vendor). You may create Landing Cost as an Other Charge item and associate it with the Landing Cost expense account. The double entry for this bill transaction will be:
Debit Inventory asset: 33,000
Credit Landing Cost: 3,000
Credit Accounts Payable: 30,000
When you received the Forwarder bill, assuming 3,500, you charge it to the Landing Cost expenses. The double entry for this bill transaction will be:
Debit Landing Cost: 3,500
Credit Accounts Payable: 3,500
There is a difference between the actual landing cost and the one you estimated (10% of the product unit cost), you may go back to the actual bill and amend the product unit cost and the landing cost accordingly or you may pass a General Journal to adjust the cost of goods sold account. I will prefer the second option, especially if forwarder bill was received after I did the month end closing. The double entry for the General Journal will be:
Debit Cost of Goods Sold: 500
Credit Landing Cost: 500