Re: question regarding set up for rental items

[Steve D. <sd...@sw...>]

Hi Ed.

First of all, Dieter's solution is fine since you've already recorded it as
inventory and you're small enough that no bankers or auditors are requiring you
to keep your books in accordance with U.S. GAAP (generally accepted acctg.
principles).

Now for the proper acctg. treatment.  What you have here is an operating lease,
which you should record as a Capital Asset (not inventory), which you will
depreciate, and record the subsequent revenue received from leasing it.

Here's how that would go in SL:
create an acct. under the Capital Assets heading called something like:
18XX - (description of) Equipment Leased to others (check it as an Exp/Asset
item)

Show the purchase of above equip.:
AP -> Add Transaction
fill in pertinet data
select the new Cap Asset next to the amount box
pay for it on purchase or later (whatever applies)

Create a lease revenue acct somewhere under the Sales Revenue heading called:
4XXX - Leased/Rental Equip. Revenue
check this as an income item

Show the rental/leasing of said equip:
AR -> Add Transaction
fill in pertinent data
select your new lease/rental revenue acct. next to the amount box
show receipt of payment on lease or later (whatever applies)

Then you depreciate it as appropriate over the life of the asset:
GL -> Add Transaction
Debit Amort/Deprec. Exp    (appropriate amt.)
Credit Accum. Amort./Deprec.  (appropriate amt.)

No inventory involved.  You can keep track of where stuff is at and depreciation
by asset with a spreadsheet if you need to.

This is just how you would have to record the above activity if you were ever
subject to an audit.

As long as that isn't the case, and you can keep track of things, you can do it
through inventory.  Just keep in mind if you take on partners, sell out, or do
any lending from banks, accountants and lawyers will probably get involved, and
you'll most likely be subject to GAAP for your books.

Hope that helps,
Steve

Ed Wiget wrote:

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> We've been using sql ledger for over a year now and its truely been a stable
> and efficient accounting program.  My accounting knowledge is minimal but the
> program is simple enough to use and understand for all but one service we
> offer.  This question should probably be directed to an accountant, but I
> thought I'd give it a shot here first.
>
> The question I have is regarding items we purchase from a vendor and then use
> as short-term rental merchandise to our customers.  Initially we had this set
> up (albeit incorrectly) by creating the vendor order and price, recieving the
> item and adding to our inventory, then billing the item out at the rental
> rate to our customers (most of the time its a daily rate below the original
> purchase price).
>
> The problem we are having is how do we add the item back into inventory
> without crediting the customer account once it is returned?
>
> Thaks for Your time and help,
> - --
> Ed Wiget
> Owner/Senior Network Security Consultant
> RHP Studios
> "Keeping Your Data Safe!"
> http://www.rhpstudios.com
> email: ew...@rh...
> email2: sec...@rh...
> Office: 606-564-0046
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> Fax: 606-564-0076
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