Insurance payout and loss.

Hi there, @AUSATN. I appreciate you providing the detailed information of your concern. I'll be happy to guide you on how to record this transaction in QBDT.
 

First, let's record the insurance payment. Since you’ve already banked the $1,000 received from the insurance company, ensure it is categorized correctly.
 

1. Go to the Banking menu.
2. Select Make Deposits and select the deposit.
3. Categorize the deposit into an Insurance Income account (you can create it in your Chart of Accounts if needed).
4. Save and close.
    

Next, remove the missing product from your inventory. This ensures your inventory records remain accurate and reflect the loss of the product.
 

1. Go to Vendors. Then, Inventory Activities.
2. Click Adjust Quantity/Value on Hand.
3. Select the item that was lost and enter a negative number in the Qty Difference field to reduce inventory.
4. Choose an expense account, such as Loss on Inventory (create this account if necessary).
5. Save the adjustment to remove the lost inventory and record it as an expense.
    

Then, record the purchase of the replacement product for $1,250.
 

1. Go to Vendors.
2. Select Enter Bill (or Write Checks if you paid immediately).
3. Input the vendor and date, and select the product from your inventory list.
4. Ensure the expense for the product is categorized under Cost of Goods Sold (COGS) or another relevant expense account.
5. Save the bill or check to record the payment.
    

As for the $250 difference, I recommend creating a journal entry. This ensures that your financial records accurately reflect the difference as an expense, so your profit and loss statement shows the full financial impact of this transaction.
 

Let us know if you need further assistance.

Hi @AUSATN,

I just wanted to follow up to check if the resolution we provided helped resolve your issue.

Please let us know if everything is now working as expected or if you’re still experiencing any problems.

We’ll be glad to assist further if needed.

I followed the steps as instructed up to entering the vendor invoice. the vendor invoice has already been entered and paid for, The check written for this invoice also covered other invoices for the same vendor, should I have paid this separately? The A/P Account is showing as Accounts Payable, is this what I need to change to show COGS as an expense.

Thank you

S

Hi there, @AUSATN.

It’s completely fine that the check covered multiple invoices, and you don’t need to separate the payment.

Since you’ve already recorded the vendor invoice and categorized the $1,250 vendor bill under COGS, there’s nothing to worry about. QuickBooks automatically applies the payment based on the expense account assigned to the bill, ensuring the $1,250 is properly recorded as part of your Cost of Goods Sold on the Profit & Loss statement.

Next, because the insurance company paid $1,000 but the replacement product cost $1,250, you have a $250 loss. To reflect this properly on your Profit & Loss statement, you’ll need to create a journal entry. Before proceeding, I suggest to seek guidance from an accountant.

Here’s how:

1. Go to Company and select Make General Journal Entries.
2. Enter the following details:

• Debit: Choose an expense account, like Other Expense, to track the $250 loss. Enter $250.
• Credit: Select Cost of Goods Sold or the account where the replacement product expense was recorded. Enter $250.

       3. Click Save & Close to complete the process.

Once done, the $250 loss will be accurately reflected in your Profit & Loss report.

Let me know if you have any other questions. We’re here to assist.

Sorry, we have not done anything beyond normal procedures.

Are you saying to go back to the original bill and change the item to an expense? if so, what will happen to the items as they were booked into stock, but recently adjusted out? 

Thank You.

S