Tag Archives: landing cost

How to record landing cost in QuickBooks?

Software: QuickBooks Desktop

Advance payment is a payment made to the supplier before goods received. It debits the advance to the supplier account, which is an Other Current Asset and credits the accounts payable. It gets complicated when including the landing cost in the product average cost; often, the landing cost has excluded from the advances made.

Assuming the goods purchased is worth $100,000, and the landing cost is $4,000 (the shipping and insurance). You record the Bill as debits advance to the supplier and credits the accounts payable of $100,000 since no goods have received. Then, do a pay bill when due; the payment debits the accounts payable and credits the bank.

QuickBooks Advance to supplier by account

You can record the $4,000 landing cost via the Enter Bill or Write Cheque method depending on whether any bill received from the forwarder. It debits the landing cost expense and credits the accounts payable when using the Enter Bill, and credits the bank if write cheque method has applied instead.

QuickBooks Frieght charges

A dummy bill has to record in QuickBooks to update the stock on hand when goods received. Select the product with the total cost of $104,000; this amount inclusive of the $4,000 landing cost. Then, deduce the $4,000 landing cost expense and the $100,000 advances paid. This dummy bill:

Debit the inventory assets account 104,000

Credit the landing cost 4,000
Credit advance to the supplier 100,000

QuickBooks dummy bill

There shouldn’t have any outstanding amount unless the advances difference from the billable amount.

The cost of sales will realise when there are sales of the product. It reduces the inventory cost and debits the cost of goods sold when an invoice has added to QuickBooks.

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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

QuickBooks - The Landing Cost

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