Where to Enter Cost of Goods Sold in UltraTax CS
Screen A. Beginning and ending inventory come from the Inventories fields on Screen L automatically, so the Beginning inventory (Force) and Ending inventory (Force) fields on Screen A are only for overriding that. Screen A also controls how much page 1 depreciation goes to Form 1125-A, and whether it lands on the additional section 263A costs line or the other costs line.
- Folders
- Screen A
- Cost of Goods Sold
| Trial balance account | UltraTax CS screen and field | Lands on |
|---|---|---|
| Beginning inventory | From Screen L automatically. Force field on Screen A | Form 1125-A line 1 |
| Ending inventory | From Screen L automatically. Force field on Screen A | Form 1125-A line 7 and Schedule L |
| Purchases | Screen A | Form 1125-A line 2 |
| Adjust purchases by change in inventory | Screen A, mark with an X | Form 1125-A line 2, adjusted |
| Production depreciation | Screen A, percentage or specific amount of page 1 depreciation | Form 1125-A 263A or other costs |
| Ending inventory tax code | Code 280 for Screen A then Schedule L, 403 for Schedule L only | Form 1125-A and Schedule L line 3 |
| Cost of labor | Screen A, production labor only | Form 1125-A line 3 |
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| Acct # | Account | Debit | Credit |
|---|---|---|---|
| 1000 | Cash | 42,800.00 | |
| 1200 | Accounts receivable | 68,500.00 | |
| 1300 | Inventory (the account this page is about) | 55,000.00 | |
| 1500 | Equipment | 145,000.00 | |
| 1510 | Accumulated depreciation | 47,500.00 | |
| 2000 | Accounts payable | 28,400.00 | |
| 2100 | Accrued expenses | 9,200.00 | |
| 2400 | Notes payable | 92,000.00 | |
| 2450 | Due to shareholder | 15,000.00 | |
| 3000 | Common stock | 10,000.00 | |
| 3900 | Retained earnings | 86,300.00 | |
| 3950 | Shareholder distributions | 52,000.00 | |
| 4000 | Gross receipts | 612,000.00 | |
| 5000 | Cost of goods sold | 318,000.00 | |
| 6000 | Salaries and wages | 88,000.00 | |
| 6050 | Officer compensation | 72,000.00 | |
| 6300 | Depreciation expense | 21,500.00 | |
| 6900 | Other operating expenses | 37,600.00 | |
| Total | 900,400.00 | 900,400.00 |
Example journal entries
| Account | Debit | Credit |
|---|---|---|
| Cost of goods sold | 24,000.00 | |
| Inventory | 24,000.00 |
| Account | Debit | Credit |
|---|---|---|
| Cost of goods sold | 318,000.00 | |
| Purchases | 310,000.00 | |
| Inventory | 8,000.00 |
Inventory flows from the balance sheet, not the other way round
UltraTax automatically transfers the amounts in the Inventories, beginning of year and Inventories, end of year fields on Screen L to Form 1125-A. The Beginning inventory (Force) and Ending inventory (Force) fields on Screen A exist to override that behavior.
So in the normal case you enter inventory once, on the balance sheet, and the cost of goods sold computation picks it up. The two figures cannot disagree because there is only one of them.
If the ending inventory arrives by tax code instead, code 280 sends it to Screen A and then on to Schedule L, while code 403 sends it to Schedule L only.
Adjust purchases by change in inventory
Screen A has a field, marked with an X, that adjusts the purchases shown on Form 1125-A by the difference between beginning and ending inventory.
It makes a negative adjustment when ending inventory is less than beginning inventory, and it does not allow purchases to go below zero. That is the right tool for a periodic client whose purchases account holds the year's buying with no inventory movement recorded, and the wrong tool for a perpetual client whose cost of goods sold is already correct.
Knowing which system the client is on decides whether to use it. A perpetual client with the box marked double adjusts.
Depreciation into the cost computation
Screen A lets you specify either a percentage or a specific amount of page 1 depreciation to go to Form 1125-A, and whether it lands on the additional section 263A costs line or the other costs line. The default is the additional section 263A costs line.
That is a genuinely useful control for a manufacturer, where depreciation on production equipment belongs in the cost of goods computation rather than as a period expense. It also means a figure can move between page 1 and Form 1125-A without the total changing, so the two have to be read together.
Production labor still has to be split
Factory wages belong in cost of labor on Form 1125-A; office and administrative pay belongs in salaries and wages on page 1. Nothing in the software knows which is which, and a client whose entire payroll sits in one account needs the split made before the return is prepared.
Reporting the same payroll in both places is the most common double deduction on a manufacturing return.
Tax return treatment
| Form | Line |
|---|---|
| Form 1120 | Form 1125-A, carried to page 1 line 2 |
| Form 1120S | Form 1125-A, carried to page 1 line 2 |
| Form 1065 | Form 1125-A, carried to page 1 line 2 |
Common questions
Where do I enter cost of goods sold in UltraTax CS?
Screen A. Beginning and ending inventory transfer automatically from the Inventories fields on Screen L, and the force fields on Screen A are only for overriding those.
Do I enter inventory on Screen A or Screen L?
Screen L, in the normal case. UltraTax carries those amounts to Form 1125-A automatically, which is why the two figures cannot disagree. Use the Screen A force fields only when the cost of goods computation genuinely needs a different number.
What does Adjust purchases by change in inventory do?
It adjusts the purchases shown on Form 1125-A by the difference between beginning and ending inventory, making a negative adjustment when ending inventory is lower, and it does not let purchases fall below zero. It suits a periodic client and double adjusts a perpetual one.
How do I get production depreciation into Form 1125-A?
Screen A takes either a percentage or a specific amount of page 1 depreciation for Form 1125-A, and lets you choose the additional section 263A costs line or the other costs line. It defaults to the 263A line.
Related answers
Go deeper
This page is the short answer. These articles work through the same ground in detail.
Last reviewed October 18, 2026.