Hi MirriamM, thank you for the reply.  So, currently when non-inventory items are received, they do not affect COGS.  Instead, I have them go into a current asset account (see image below) that we call WIP accounts.  All non-inventory items will sit in those asset accounts until our customer is invoiced for the non-inventory item.  To move the items from asset to COGS, I first download to excel a detailed sales report at the end of each month of every single non-inventory item we sell for that month.  That report is compared to a quick-report of each asset account that contains the non-inventory items - also downloaded to excel. I look for matching customer/job names and descriptions or tag# to match them up between the reports, highlight the ones I find, use sum-functions in excel to get my total cost of doors, windows, cabinetry, etc for that month based off of what we sold (see other attached image). Then I make a journal entry to move those values from the asset account to COGS.  Finally, I reconcile the asset accounts to clear the non-inventory items that have now been moved to COGS so they don't continue to show up on the quick report. I'm basically just manually doing the same thing as what an inventory item does automatically. This method works, but it's not hard to make a mistake and it is time-consuming.

We have spoke with our tax accountants and they have suggested creating these new items as inventory items. I agree that it is a more accurate way to get the right COGS in at the right time, but yes, we're talking about a lot of items being created.