How Internal / Non-Customer Sale Invoices Reflect on Profit & Loss

Overview

When a service is performed for an Internal / Non-Customer Sale invoice (such as Prep Equipment for Sale, Guaranteed Maintenance, Rework, etc.), the system records the Sale and Cost incurred by the Service Department performing the work. However, since this sale isn’t actually revenue, an Expense is used to offset the artificial income and ensure the Profit & Loss accuracy. 

Account Distribution

Example: Equipment Prep for Sale

• Sale Code
  • Sales: $250.00 (G/L 41000145 - Internal Shop Service Income)
  • COGS: $100.00 (G/L 51000145 - Internal Shop Service COGS)
• Expense Code
  • Expense: $250.00 (G/L 50940110 - Equipment Sales COGS)

Analysis: Here, the system recognizes a $250.00 sale for the labor to prep equipment for sale, but since this isn't actual revenue, an equal expense is posted to offset the income. The actual cost of the labor is reflected in the COGS as $100.00, representing the true cost incurred by the service department.

Invoice Setup

• Select the Type of Sale for the department performing the service under Sale Information. 

• Select the Type of Expense for the department responsible for the Cost under Expense Information. 

• The Bill To Customer will be the appropriate Internal Use customer.