I have another inventory-related question I’d appreciate help sorting out. Again, I’m using QBO.
A licensor company is due $2,000 in product royalties from a company that manufactures products (t-shirts, etc.). Ordinarily the licensor just collects royalties from the manufacturer when the manufacturer sells the shirts. However, the licensor company also recently purchased $500 of the products for the licensor’s own inventory and resale. The licensor resold the products for $1,000. Instead of paying the full $2,000 of royalties owed to the licensor, the manufacturer deducted the $500 cost of the shirts purchased by the licensor, and paid the licensor the net amount of $1,500. The $1,500 has been deposited in the licensor’s bank account, and I’m trying to match it to the correct accounts/transactions.
What is the best way to account for the above transactions in QBO? I need to show the full $2,000 as royalty income and show the $500 as a purchase by the licensor of new inventory. (And match the deposit appropriately.). Those are the steps I couldn’t figure out (after trying a number of approaches). Once I’ve sorted out the foregoing, of course, I need to show the sale of the inventory ($500 COGS) for $1,000, but that seems straightforward.
Thank you.
