1. Premium 2011 Setting Up the INVENTORY & SERVICES Module

2. Contents The INVENTORY Module: Overview 3 Setting INVENTORY Module to READY 5 Step 1: Set Module Defaults. 6 Step 2: Set INVENTORY Linked Accounts. 8 Step 3: Enter Existing Inventory & Service Items. 9 - Creating an Inventory Ledger 9 - Creating a Service Ledger 12 Step 4: Set the Module to READY. 13 Contents Slideshow 8A

3. The INVENTORY Module: Overview This module is called the Inventory & Services module. It is used to keep track of inventory items (merchandise for sale) and services rendered by the company for a fee. Simply uses the Perpetual inventory method in this module. For each purchase of inventory items, the quantity and cost of the corresponding item are increased. Similarly, the quantity and cost of the corresponding inventory item are decreased by every sale. Simply uses average cost in keeping track of inventory costs (default). Users can choose to use FIFO (First In, First Out) instead. LIFO (Last In, First Out) is not an option. Click and study (at right) the basic procedure in processing INVENTORY- related purchases and sales transactions. Click to continue. When merchandise is purchased: When merchandise is purchased, it is recorded in the PAYABLES module and the quantity and value of the corresponding merchandise items are automatically increased in the INVENTORY & SERVICES module. When merchandise is sold: When merchandise is sold, it is recorded in the RECEIVABLES module and the quantity and value of the corresponding merchandise items are automatically decreased in the INVENTORY & SERVICES module.

4. The INVENTORY & SERVICES Module : Overview (continued) It is important to understand the difference in recording inventory- related transactions in the Periodic and Perpetual methods. First, review the definitions of these two methods. Click and review the definitions. Now, study how Simply treats purchases and sales of merchandise in the Perpetual method compared to Periodic. Click and study the chart. Notice that in the sales of merchandise, both methods debit ACCOUNTS RECEIVABLE and credit SALES. The Perpetual method also takes into account COST OF GOODS SOLD and INVENTORY every time a sale is recorded, but not in the Periodic method. This is because in the Periodic method, cost of goods is taken into account at period-end after a physical count is done. Click to continue. Method used by a company that chooses to record the increases and decreases of INVENTORY every time a purchase or a sale of merchandise occurs. Perpetual Inventory Periodic Inventory Method used by a company that conducts a physical count of merchandise on hand at certain periods, usually period-end (monthly or yearly) and makes adjustment on INVENTORY accordingly. Periodic Inventory Perpetual Inventory Purchases xxx Accounts Payable xxx Inventory xxx Accounts Payable xxx Accounts Receivable xxx Sales xxx Accounts Receivable xxx Cost of Goods Sold xxx Sales xxx Inventory xxx Purchases of Merchandise: Sales of Merchandise:

5. Setting the INVENTORY Module to READY Before the INVENTORY & SERVICES module can be used, the COMPANY, PAYABLES and RECEIVABLES modules must have been set to READY. Setting the INVENTORY module to READY includes entering existing inventory items with quantities and costs. Study the basic procedure in setting the INVENTORY module to READY at the right. Click to continue. Setting INVENTORY Module to READY  Step 1: Set Module Defaults.  Step 2: Set INVENTORY Linked Accounts.  Step 3: Enter Existing Inventory & Service Items.  Step 4: Set the Module to READY.

6. Step 1: Set INVENTORY Module Defaults: System Settings Click OPTIONS under Inventory & Services in SETTINGS. Inventory Costing Method options are: Click AVERAGE COST and read the explanation. Click FIFO and read the explanation. Profit Evaluation Method indicates how Simply calculates gross profit. Click PROFIT EVALUATION METHOD and compare the calculation of the two options. Click. Sort Inventory & Services by – You can sort your inventory and services items either by Number or Description. Click PRICE LIST on the SETTINGS panel to continue. Average cost - the default inventory costing method in Simply. It is calculated by dividing the total cost of units for sale by the quantity of units available for sale. Average cost tends to level out the effects of cost increases and decreases because the cost is influenced by the prices paid during the year. Inventory valued on a FIFO basis assumes oldest inventory will be sold first. Therefore, ENDING INVENTORY will include most recent costs and COGS will include older unit costs. Markup = (Selling Price – Cost)/Cost Margin = (Selling Price – Cost) Selling Price

7. Step 1: Set INVENTORY Module Defaults: System Settings The PRICE LIST page makes it easy to control pricing when processing INVENTORY transactions. Click. You may assign a Regular, or Preferred price for any item (Web features are no longer available.) Click. If, for example, there is a Store-Wide Sale and all items are on sale, you may click the Update Price Lists button at the lower right (see arrow). Click UPDATE PRICE LISTS now. You can then decrease the Regular price by a certain percent. Click. Make sure you click the appropriate choice under Show. Click to continue. PRICE LIST Page

8. Step 2: Set up INVENTORY Linked Accounts As in the earlier lessons, you need to link INVENTORY accounts to the other modules. Simply uses the accounts specified here when you process inventory adjustments or assemble items with Item Assembly. Item Assembly Costs – used when a business takes a number of parts and assembles them into a product for sale (e.g., assembling components into a saleable computer system). This field may be left blank if the company does not assemble products made of various components. Adjustment Write-off – This G/L account is used to record adjustments to increase or decrease the Inventory quantity/cost to reflect actual count on hand. Click to continue.

9. Step 3: Enter Existing Inventory Items Creating an Inventory Ledger In order to keep track of increases and decreases of each INVENTORY item, you need to create individual records in the Inventory & Services Ledger. Click ADD INVENTORY & SERVICE. Study the Quantities page of the Inventory & Services Ledger for InkJet Black Cartridge. Quantity (On Hand) is automatically updated every time you sell or purchase this item. Also notice the Minimum Level field under Reorder Quantities. When this level is reached, Simply will give you a warning. Click on the various tabs from left to right starting from UNITS and study the information on each page. When you enter this inventory item in an invoice, this will be the default UNIT. When you enter this inventory item in an invoice, the REGULAR price you enter here appears as BASE PRICE on the invoice. If you double-click the BASE PRICE on the invoice, what you enter in PRICE PER SELLING UNIT will appear and you will be able to select any of the prices shown When you entered 5050 INVENTORY ADJUSTMENTS in the Inventory & Services Settings earlier (see below), it refers to ALL inventory items. You will enter the linked accounts particularly for InkJet Black Cartridge on its own Inventory Ledger VARIANCE is used if the company allows negative inventory. This page is used when the company bundles inventory items to create a package, usually for special promotional purposes. This page is updated as you process inventory-related transactions. It is best to set HST as non-exempt (or alternate tax codes depending on the province). You can set up taxes in individual customer and vendor ledgers.

10. Step 3: Enter Existing Inventory Items Creating an Inventory Ledger In order to keep track of increases and decreases of each INVENTORY item, you need to create individual records in the Inventory & Services Ledger. Click ADD INVENTORY & SERVICE. Study the Quantities page of the Inventory Ledger for InkJet Black Cartridge. Quantity (On Hand) is automatically updated every time you sell or purchase this item. Also notice the Minimum Level field under Reorder Quantities. When this level is reached, Simply will give you a warning. Click on the various tabs from left to right starting from UNITS and study the information on each page. When finished, click to continue. These two pages have the same purpose - to keep additional information about the inventory item. If you look closely, however, information in the ADDITIONAL INFO page may be displayed when the inventory item is selected in a transaction (see arrow above). The DETAILED DESC page allows you to attach a picture or a thumbnail file which could be saved anywhere in your computer (see arrows below). Additional Information Page Detailed Description Page

11. Step 3: Enter Existing Inventory Items (continued) After entering the historical data for all inventory items, you must ensure that the total of the opening values entered in the History page must equal Inventory Total (see right) on the Balance Sheet. You may display/print the Balance Sheet before you set the module to READY. You can then compare the Inventory Total to that of the old system. Click. To check details for each inventory item with the old system, you can print the INVENTORY SUMMARY in the Report Centre. You should do this before you set the module to READY. Click to continue.

12. It is best to enter the time increments that you use for charging the service in the UNIT OF MEASURE box. On the invoice, you would enter the number of time increments used for the service under QUANTITY and the UNIT column will display the Unit of Measure. This will make your billing clear to the customer. This page, like any other inventory ledger, contains the price list for the particular service item. The Regular price is used as the default and will appear in the Base Price column of the invoice. Notice that the REVENUE linked account for Services is different from Inventory items (see red frame at left). Click. What you enter in the REVENUE linked account is automatically entered under the ACCOUNT column on the invoice when the service item is entered. HST is set as non-exempt on the TAXES page for this item. Simply uses the tax code set under Taxes in the company settings (see red frame at left). This invoice is for service for 30 minutes. Notice that 1.5 is entered under QUANTITY because billing for this item is by 20-minute increments. Step 3: Enter Existing Inventory Items (continued) Creating a SERVICE Item Some companies offer both merchandise and services. You can use the Inventory & Services Module to manage them both. Notice that at the bottom of the Inventory Item column at the right are two Service items. Click and study the UNITS page of the Ledger for the first service item, REPAIR INKJET OUT OF WARRANTY. Click each item below for information on the various pages of the Ledger. Pricing Linked Taxes Click to continue.

13. Step 4: Set the Inventory & Services Module to READY Study the various reports that you can display regarding INVENTORY through the Report Centre to ensure that all of the inventory items are entered properly. You can then set the module to READY. Click to continue.

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