NESFA Treasury Use of Asset Accounts to Accumulate Book Production Expenses

Due to peculiarities of Peachtree and the fact that NESFA is on a cash accounting basis, we have to jump through some oddly-shaped hoops to properly make the cost of producing a book an inventory asset. This is the procedure:

When a book is started, create an asset account for the book. We have about twenty asset accounts (named AS-Book1 through AS-Book28) which can be re-used for that purpose. Pick one which is currently unused (has a balance of zero) and change its name to reflect the book you will be accumulating expenses for.

As expenses come in and checks are written, use the AS-Booknn account instead of an expense account to accumulate all the book expenses. As the book moves to completion, all of the expenses incurred will be included in this account.

When we pay royalties on publication, the royalties paid are also put in this account via a general journal entry which puts the computed royalty amount in RY-author, and AS-Booknn.

Once all of the expenses are in, and we know the number of copies printed, we buy the book into inventory with a single transaction where we record a purchase where we "spend" the total value of the AS-Booknn account to buy however many books were actually printed. This transfers the cost of publishing the book from the AS-Booknn account to the IV-book account. At the end of  this the AS-Booknn account should have a zero balance.

It is highly desirable to buy the book into inventory as early as possible. This should not be delayed more than necessary and should happen as soon as the final printing and shipping bill arrives (which also includes the exact number of books printed.)

Sometimes it turns out that some smallish expenses are not turned in in a timely fashion. You have two choices:

• Ignore them and treat them as SE-book expenses when they come in.
• Estimate them by buying in the book for more than is currently in the AS-Booknn account. When the expense actually comes in (a late expense report, perhaps) this will bring the AS-Booknn account to zero. If the amount was estimated incorrectly, do one further transaction to zero the AS-Booknn account out against the SE-book account.