CenterPoint® Accounting for Agriculture - Purchase Prepaid Supplies/Crop Inputs Work in Process (WIP)

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The process of purchasing crop inputs using the accrual method of accounting involves purchasing the inputs into a work in process inventory account (Current Asset). The value of those inputs will remain on your Balance Sheet for the remainder of the production cycle. In the same period that you harvest your production, you will create a transaction that moves the balance of the work in process accounts to a cost of goods or expense account. Entering the purchase of crop inputs is not different than entering in an expense payment other than the account that you are selecting in the transaction is an Asset in one of the WIP categories.

Prerequisite - Setup WIP Inventory Accounts: Prior to entering any prepaid purchases, you must have the appropriate WIP inventory accounts setup (Setup > Accounts > Accounts). On these accounts, the Category must be one of the WIP categories (Seed/Plants WIP, Fertilizer WIP, Supplies WIP, etc). See Step 8 below for an example of an account setup with a WIP category. We recommend you create separate WIP accounts for various supplies (for example, Roundup, Hornet, etc.). This will make expensing the supplies easier and more accurate.

Purchase Prepaid Supplies

  1. Select Processes > Purchases > Payments. The screen will look similar to a check.

  1. In the Companybox, enter your company.
  2. In the Bank Account box, enter  the bank account that will be decreased by this payment transaction. If this transaction is to record a purchase made using a line of credit, select the appropriate line of credit in the Bank Account field.
  3. In the Check Number box, enter the appropriate check number.
  4. In the Date box, enter the transaction dateenter the transaction date.
  5. In the Pay to the Order Of box, enter the name this payment is being made to.
  6. In the Amount box, enter the amount paid for the supplies.
  7. When entering information into the Payment Entry grid, select the Account that the amount, or a portion of the amount, should be charged to. When supplies for the next harvest are pre-purchased, this should ALWAYS be an account that has a WIP category assigned to it. Note: Once an account is selected, you can verify that it has a WIP category assigned by right-clicking on the Account and selecting Edit. The Category field should be a WIP category. as seen in the example below.

  1. Specify the Quantity 1 of the item purchased.
  2. Specify the Amount to be charged to this account.
  3. Enter any additional information that is needed for your company (Notation, Quantity, etc.)
  4. Enter additional lines in the payment entry grid for each account that should be charged for this transaction. Again, if this is supplies that will be expensed at harvest time, always select an account that has a WIP category assigned to it.
  5. Click the Print button to print a check.
Note: If you want to attach a document to this transaction, see the Attach Documents to Transactions topic for detailed information.
  1. When the transaction is complete, click Save.

Document: 3060

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