Accounting for third party assembly builders / contractors

1. Create a Holding Expense Account. Go to Lists > Accounting > Accounts > New.
-Type: Expense
-Enter an Account Name and other required Fields.
-Click Save Button.

2. Reduce the Quantity of the Component Items by creating a Negative Inventory Adjustment for your components everytime you issue them to your Builder: Use the Holding Expense Account as the Adjustment Account.
GL Impact:
DR: Holding Account Expense      100
CR: Raw Materials Inventory                 100

3. Increase the Quantity of the Assembly Items by creating a Positive Inventory Adjustment for your Assembly everytime you receive them from your Builder: Use the Holding Expense Account as the Adjustment Account. The amount should be Cost of Components + Building Cost.
Example: Building Cost is $20.
GL Impact:
DR: Assembly Asset        120
CR: Holding Account Expense      120

4. To recognize your liability to your Builder/Vendor, create a Purchase Order. On the Expenses tab, Enter the Holding Account Expense and enter the Building Cost ($20) as Amount. When an Item Receipt is created, it will not have a GL Impact since this is an expense item.
Upon Billing, it will create a GL Impact:
DR: Holding Account Expense            20
CR: Accounts Payable                               20