Entering Inventory on hand at startup

Angela77 · ‎March 09, 2018

My client started business with parts inventory that he owned personally.

He used a QBOnline transaction type called Inventory Starting Value to record each part.

It does record to the Inventory Asset and Opening Balance Equity. But I have never seen this done before. Is this the "best practice"?

Are there other ways of doing this? I would have created a Bill for each type of part according to the Item code desired, paid via the Cash account and made a Deposit from Equity to clear.

I am interested to learn the best way to do this. The Entity is a corporation taxed as SCorp.

Thanks.

Rustler · ‎March 10, 2018

Yes that is normal when you enter a starting value for any item, account, vendor, customer

OBE is a catch all account intuit created because, IMO, they did not want to mess with equity allocation percentages. When the user gets done with all starting balances, then you clear OBE to owner equity with a journal entry, debit OBE, credit equity

Are there other ways of doing this? I would have created a Bill for each type of part according to the Item code desired, paid via the Cash account and made a Deposit from Equity to clear.

This is another way to do it, many of us prefer to do it this way, but the end result is the same.

View solution in original post

Rustler · ‎March 10, 2018

Yes that is normal when you enter a starting value for any item, account, vendor, customer

OBE is a catch all account intuit created because, IMO, they did not want to mess with equity allocation percentages. When the user gets done with all starting balances, then you clear OBE to owner equity with a journal entry, debit OBE, credit equity

Are there other ways of doing this? I would have created a Bill for each type of part according to the Item code desired, paid via the Cash account and made a Deposit from Equity to clear.

This is another way to do it, many of us prefer to do it this way, but the end result is the same.

Angela77 · ‎March 10, 2018

Thank you, Rustler!

Rustler · ‎March 10, 2018

You're Welcome

CST Parker · ‎November 25, 2018

Hello Sir, I have a similar question. We purchased a business, that came with assets (tools). How do I delineate each item, or assign it a value, but not have it exceed the purchase price of the business. In my example, I purchased a business for $5000. In looking through the assets that came with the purchase of the business, I have about $10,000 worth of tools (score!) and need to account for them somewhere so that when I get rid of one or replace it, that gets noted. Thoughts? Thank you! Chris

EK3 · ‎November 07, 2019

I have a similiar question regarding starting inventory.

We switched our company over from Sage 50 to QBO and QBO did the switch for us but all that came over from Sage for inventory was the trial balance number, so I entered all the individual quantities of inventory but now it has doubled up our inventory amount. What is the best way to deal with this? I have been on the phone with QBO help desk for over an hour for them to help me but so far nothing. I also need to know about the Opening Balance Equity is that the correct account for Inventory Starting Value to go to?

RaymondJayO · ‎November 07, 2019

Welcome to the QuickBooks Community! Thank you for choosing QBO as your new accounting partner, @EK3.

I understand how you feel when your concern hasn't fixed yet after contacting our support team. But you've got me here today so I can help answer your questions regarding starting inventory.

Switching from Sage 50 to QBO automatically moves your inventory data. Manual entries of inventory quantities will double up your inventory amount. The best way to deal with this is to manually adjust inventory quantity on hand for those products. This ensures your QBO inventory matches your actual stock on hand. Let me guide you how.

Go to the Create (+) icon at the upper right.
Select Inventory qty adjustment Under Other.
Enter the Adjustment date.
Choose the appropriate account in the Inventory adjustment account drop-down menu.
Select the products in the Product field drop-down.
For each item, enter either a new quantity or a change in quantity.
Enter the details about the adjustment in the Memo field.
Click Save.

The screenshot below shows you the last six steps.

As Rustler stated above, you can select the Inventory Starting Value account for your Opening Balance Equity of your products. However, I'd still suggest consulting your accountant to determine the appropriate account specific to your business. This also ensures your sales and inventory reports are accurate.

You can visit this website: Setting Up Inventory in QuickBooks Online. You'll find set of videos on how to create inventory products, record their sales, and run inventory reports.

I'll be here to lend a helping hand if you have other concerns. Wishing you and your business continued success in QuickBooks, @EK3.

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Entering Inventory on hand at startup