How Record Inventory Purchases and COGS

Good day, @ellochewy. I'd be glad to help you record your inventory purchases for it to affect your Cost of good sold  in QuickBooks Online (QBO).

Depending on your subscription if you're on QuickBooks Online Plus or Advanced, you can add everything you buy and sell in your inventory into QuickBooks. Then, you can let QuickBooks update the quantity on hand as you work so you don't have to do them. Once it's set up, it's easy to track inventory in QuickBooks and products to sales forms. To  begin, you'll want to turn on the inventory tracking feature. Here's how:

1. Go to the Gear icon and select Account and settings.
2. Select the Sales tab.
3. Select Edit ✎ in the Products and services section.
4. Turn on Show Product/Service column on sales forms.
5. You can also turn on price rules if you want to set up flexible pricing for the things you sell.
6. Turn on both Track quantity and price/rate and Track inventory quantity on hand.
7. Select Save and then Done.

Refer to this article for more information about how to set up and track inventory in QBO: Set up and track your inventory in QuickBooks Online.

To track what you receive from your vendor, you can create a bill from the purchase order if you'll pay your vendor later. However, if you paid your vendor on the spot you can create a check or an expense from the purchase order.

In addition, when categorizing your purchases in your transaction history, you can categorize them as inventory. Record as transfer is when you move money  or transaction from one account to another.

Once done,  you can create either an invoice or sales receipt so your COGS ( Cost of Goods Sold) will be affected whenever an item gets sold. Before sending a sales transaction, you'll have to create an account to track your inventory value. Let me guide you, here's how:

1. From the Accounting tab select Chart of accounts.
2. Select New.
3. Choose Current assets from the Account Type drop-down.
4. Select Other current assets from the Detail Type drop-down.
5. Click Save and Close.

Then, create an account to track your cost of goods sold:

1. On the Chart of accounts page, click New.
2. Choose Cost of Goods Sold from the Account Type drop-down.
3. Select the closest type of Cost of Goods Sold that matches your situation from the Detail Type drop-down. If you're not sure, use Other Costs of Service - COS.
4. Click Save and Close.

When your done, you can proceed to create a sales transaction.

Refer to this article to learn more about how QuickBooks Online calculates COGS: Cost of goods sold: How to calculate and record COGS.

If your subscription is QBO Simple Start or QBO Essentials, you can track your inventory manually. Feel free to refer to this article for the steps: Track inventory manually in QuickBooks Online.

You can also reach out to your accountant. This way, they can give an advice on what's the best way to handle it.

I've got you these handy articles in case you'd like to see your sales and inventory status: Use reports to see your sales and inventory status.

Our door is open 24/7 if you need further assistance with handling your inventory purchases in QuickBooks Online. You're also welcome to post here again if you have any additional QuickBooks-related concerns. Rest assured, our team of dedicated experts is always ready to help you anytime. Thanks for choosing QuickBooks. Take care, and have a great week!