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• Select both Smart Data Entry options by putting check marks in the
“Automatic field completion” and “Drop-down list displays
automatically” check boxes.
You could possibly have other global options selected as well. However,
the above options are the only ones that directly affect this tutorial.
6 When finished, select OK to close the Maintain Global Options window.


Tracking Inventory Items
Peachtree Accounting lets you track inventory items both in purchasing and
sales (for stock items only). When you set up an inventory item, you can
establish the general ledger accounts to update with purchases and sales. If
you choose, Peachtree Accounting tracks the cost of goods sold, stock levels,
sales prices, and vendors for your items.

Types of Inventory Items
There are several types of items you can use in Peachtree Accounting. These
are called item classes. For a detailed explanation of the following item types,
refer to the Inventory chapter of the User™s Guide.
• Non-stock item
• Stock item
• Description only
• Assembly
• Service
• Labor
• Activity item
• Charge item


Setting Up an Inventory Item
Our sample company, Bellwether Garden Supply, sells and installs garden
supplies and tracks them as stock inventory items. It also offers various
landscaping services and bills clients for items used. First, let™s enter a new
garden supply product to be stocked as an inventory item.




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1 From the Maintain menu, select Inventory Items.
T




Our new product is Violet Seeds.
Enter SEFL-31180 in the Item ID field and press e. The cursor moves to
2
the Description field.

Type Violet Seeds and press e. The cursor moves to the Item Class
3
drop-down list. Stock item is the default type.

Make this a stock type item by pressing e. The cursor moves to the
4
Description field.
You can have two different detailed descriptions for inventory items”
one for sales, which appears on sales quotes, orders and invoices, and the
other for purchases, which prints on purchase orders and invoices. You
can use up to 160 alphanumeric characters for each description.
5 Select “for Sales” and type the following description: Bell-Gro Violet
Seeds.

6 Select “for Purchases” and type the following description: Catalog #:
101037: Violet Seeds.
This description refers to the Vendor™s identification of the product.
7 Move to the Sales Price # field and press the arrow button beside this field.
You can set up five different sales prices per item. For this item, we™ll
only set up one price.




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8 Type 1.39 in the Sales Price #1 box, and then select OK to set the sales price
per ring to $1.39.

In the Unit/Measure field type Packet and press e. The cursor moves to
9
the Item Type field.
The Item Type is a way of classifying similar inventory items for sorting
and printing in reports.


All type fields are case sensitive. The program reads Supply, SUPPLY, and
supply as being different types.
Note
10 Type SUPPLY to classify the violet seeds as a supply item.

Inventory Default Accounts
When you purchase inventory stock-type items, you credit accounts payable
and debit the inventory account. When you sell inventory stock-type items,
two sets of disbursements take place:
• Debit accounts receivable, credit revenue
• Debit cost of goods sold, credit inventory
You must tell Peachtree Accounting which revenue account and cost of
goods sold account to update for sales and which inventory account to
update for both purchases and sales.
11 Being a retail and service company, Bellwether Garden Supply defaults the
following accounts for stock items:
G/L Sales Account: 40000 Sales

G/L Inventory Account: 12000 Inventory

G/L Cost of Sales Account: 50000 Product Cost

These accounts are set up in Inventory Item Defaults window. (From the
Maintain menu, select Default Information then Inventory Items to
display the Inventory Item Defaults window.) Each time you enter an
item these accounts are already established for you. If an item is an
exception, you can change the account information for this item on the
Maintain Inventory Items window.
In our sample company we created some accounts specifically for seeds.
Use the lookup list in the G/L Sales Acct field to enter account number
40000-SE (Sales - Seeds). Keep the default account (12000) in the G/L
Inventory Acct field. In the G/L Sales Acct field, enter 50000-SE (Product
Cost - Seeds).




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12 Move to the Cost Method field.
Peachtree Accounting offers three costing methods to track your stock
and assembly items in inventory:
• Average Cost
• Last In First Out (LIFO)
• First In First Out (FIFO).
Always select the same method for each item in your inventory. Check
with your accountant about the implications of changing this method. It
should only be changed at the beginning of the fiscal year. For more
information about costing methods, refer to the “Inventory” chapter of
the User™s Guide.
Our sample company uses the FIFO cost method for all its stock and
assembly items.
13 Move to the Last Unit Cost field. Type .55 and press e. The cursor
moves to the Item Tax Type field.
The Last Unit Cost field is used for entering the cost of new inventory
items in case you sell an item before there is a purchase, payment, or
adjustment to base the real cost on. Once you enter a purchase, payment,
or beginning balance, the item cost is calculated by Peachtree
Accounting™s costing system (depending on your costing method).
In the Item Tax Type lookup box, you specify whether or not the item is
subject to sales tax. You might also set up specific taxes for items that
have special exemptions. An explanation of these exemptions is required
by some states.
14 Type 1 (the code for a Regular taxable item) and press e twice, skipping
the Subject to Commission field. The cursor moves to the Minimum Stock
level field.
This records the minimum quantity on hand of the stock item you can
reach before you need to reorder the item. Also, you can set your global
options and action item alerts to warn if you fall below the minimum
stock level. If you include a minimum stock level, you can effectively use
the Inventory Reorder Worksheet in reports when you are ready to make
inventory purchases.
15 Type 6 and press e to move to the Reorder Quantity field.

This records the minimum number of items you can reorder at one time
(for example, the number of items in a case).




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16 Type 12 and press e to move the cursor to the Preferred Vendor ID field.
You can specify a primary vendor for a stock item. This is only used to
track your recommended or usual vendor. You can still purchase items
from other vendors.
17 Type ARBOR-01 for the vendor and press e.

18 Press 5 to save this inventory item, and press q to close the window.


Inventory and Purchases
Now let™s purchase the item from our vendor.
1 From the Tasks menu, select Purchases/Receive Inventory. The Purchases/
Receive Inventory window appears.

Type ARBOR-01 in the Vendor ID field and press e.
2
We received purchase invoice # 104 for 12 packets of violet seeds.
3 Type 1˜4 for the vendor™s invoice number.
This is generally a required field. However, you can select Waiting on Bill
from Vendor if this is not known yet.
4 Select the Apply to Purchases tab. Move to the Quantity field.

Type 12 and press e. The cursor moves to the Item field.
5

Type the code we just created”SEFL-31180”and press e.
6
The purchase description and G/L Account default to the information
we entered in the Maintain Inventory Items window.
7 Move the cursor to the Unit Price text box.

Enter .55 as the Unit Price and press e.
8
6.60 appears in the Amount field.

9 Post this purchase.

10 Press q to close the window.
When you post, Peachtree Accounting credits accounts payable and
debits inventory (in an accrual-based company). The cost is updated
each time you make a purchase, and is used to calculate cost of goods
sold when an item is sold.




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Inventory and Sales
When you sell a stock-type item, Peachtree Accounting updates accounts
receivable and computes the cost of goods sold, using the selected costing
method. In the General Ledger report, entries are made which update
accounts receivable, revenues, inventory, and cost of goods sold accounts.
Peachtree Accounting also displays the inventory and cost of goods sold
distributions in a separate Cost of Goods Sold Journal for tracking purposes.
The entry is dated the day of the sales transaction.
Now that we have the item in stock, let™s enter a sale using our inventory item.
1 From the Tasks menu, select Sales/Invoicing. Peachtree displays the Sales/
Invoicing window.

2 Click the lookup button in the Customer ID field and select HENSLEY-01
(Hensley Park Apartments).

3 Select the Apply to Sales tab if it is not already selected. Move to the
Quantity column in the first transaction line.

Type 2 and press e The cursor moves to the Item column.
4

5 Click the lookup button to display the Item lookup list.

6 Single-click item SEFL-31180 (Violet Seeds). Notice the quantity on hand
registers as 12.0000. Before you select OK, take a moment and select the
Edit button at the bottom of the window.
The Maintain Inventory Items window appears, showing the SEFL-31180
record. You could conceivably edit this record, save it, and then return to
the Sales/Invoicing window. You can use this feature for all lookup lists.
Notice that the Quantity on Hand displays 12.0000 as well.
Press q to return to the Sales/Invoicing window.
7

Type SEFL-31180 and press e. The account defaults to the information
8
we entered when setting up the inventory item.

9 The program computes the amount, based on the quantity times the unit

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