Shop Warranty Expenses
When a shop covers the parts and labor of a job for a customer due to a mistake, how is that properly entered? 1) the customer needs an invoice showing the parts and labor done. I entered the parts in bills under Warranty Expense and then put them on the invoice as 0qty so they end price would be 0 but they could see what the cost would have been. I entered labor on the invoice and then billed it out to Warranty Expense as well. Sales tax on labor. ____________________________________________________ Other option: I record the parts under Parts Purchased (COGS) like normal. Add them to the invoice like normal with sales tax. Then zero out the entire invoice to Warranty Expense. Which is the proper way to do this entry? Should we charge sales tax on the invoice since it is being covered by the shop and not actually a resale? The parts were purchased under resale tax exempt.
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