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K
Kvosburgh
July 30, 2023
Question

Accounting for damaged/destroyed items. I don't use Inventory so it's purely about removal from CGS

  • July 30, 2023
  • 1 reply
  • 30 views

I miss GoDaddy Bookkeeping so much.

The problem I'm having has to do with Cost Of Goods sold when not using Inventory.

I purchase my items to resell and get a receipt from the vender. I enter the total into CGS and at the end of the year I'll be able to subtract my remaining Inventory from CGS and carry it over into the next year. Simple enough, you would think.

I have a receipt that has multiple damaged items on it. Let's just say the total is $64.75 and I have $7.42 worth of items purchased that needed to be disposed of. I went to the original transaction and tried creating a -$7.42 entry into CGS to account for this removal but It causes my Bank Account to be $7.42 off from the Quickbooks total. 

Is there a way to accurately record this? 

1 reply

Rustler
Rustler
Level 15
July 31, 2023

Why should it be removed. CGS is the expense (cost, the amount you paid) of what was sold. The damaged/lost/stolen items are still an expense of what was sold.  If you did keep inventory and you found a damaged item in stock, you would remove it from stock with an inventory adjust, but the cost of that item would go to a sub account of COGS called COGS shrinkage.

K
KvosburghAuthor
August 1, 2023

I appreciate the quick answer but I'm under the assumption that CGS is only relevant when the item is sold. Hence the reason that I need to take Inventory at the end of the year so I can remove any items not sold from my CGS total.

Does it not fall into a different category for that reason? 

Morgan_B
Morgan_BQuickBooks Team
QuickBooks Team
August 1, 2023

Thanks for following up, Kvosburgh.

 

In this instance, I recommend consulting with your accountant for the next steps. They'll be able to tell you the best way to enter your Cost of Goods Sold data based on your business setup. 

 

If you don't currently have an accountant you can find one in your area specifically trained in QuickBooks by searching here: Find a ProAdvisor

 

Please feel free to reach back out if you need assistance with the entry or have any other questions. Take care!

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