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aharris999
Level 2

Adjust inventory value in QBO

In QBO, I recently ran the report "Inventory Valuation Summary" and exported to Excel.  There I noticed that I have a lot of inventory items with zero quantity on hand, but a small inventory value (usually a few cents, positive or negative).  How do I perform an Inventory VALUE adjustment in QBO to zero out the value of inventory that already has zero quantity on hand?

 

If I have zero quantity on hand, the value of that inventory should be zero also.

 

Thanks.

21 Comments
AlcaeusF
Moderator

Adjust inventory value in QBO

Hello aharris999,

 

Thank you for posting here in the Community. I'm here to assist you with your question concerning the inventory value.

 

The opportunity to adjust inventory value is only available in the Desktop version of QuickBooks. Right now, the available option in QBO is to make quantity adjustments only.

 

QuickBooks Online uses the First-In, First-Out method. If you need additional assistance concerning the inventory value, I recommend reaching out to our Support Specialists.

 

In case you need an additional reference about what you can adjust, I'm adding the article below:

 

Adjust inventory quantity or value.

 

They'll be able to pull up your account and provide assistance concerning your inventory. Here are the steps on how you can reach them:

 

  1. Click the Help option.
  2. Select Contact us.
  3. Enter your concern.
  4. Click Continue.
  5. Choose a way to connect.

Please keep in touch with me here for all of your questions related to your inventory. I'm always up to lend a hand.

aharris999
Level 2

Adjust inventory value in QBO

This is not an acceptable answer.  I contacted a support representative, as you suggested, and that person told me that Inventory Value adjustments in Quickbooks Online are not possible.  This is ridiculous!  Why would QBO allow me to have  quantity zero on hand, but still have $ dollar value, and no way to reconcile this?  Very disappointed.

Malcolm Ziman
Level 10

Adjust inventory value in QBO

@aharris999 

One way is to create a zero expense.  In the Items sections enter the Item with a qty of 1 at zero cost, and on the next line enter the same item with a qty of -1 at whatever the current value is, and in the Details section enter the value posted to an inventory adjustments expense account

vpcontroller
Level 11

Adjust inventory value in QBO

@aharris999 

 

"This is not an acceptable answer."

Yes, I agree!

 

Over the years, that does happen in QBO Inventory. This is a known glitch in QBO, they've never addressed it, I believe.

 

I'm not sure there is even an option on how to fix 'inventory value' only in inventory when that happens. You can make it inactive if no longer use these items, total value will automatically post to Inventory Shrinkage account.

keeperdavid
Level 3

Adjust inventory value in QBO

I have the same problem.

Malcolm's suggestion should work, but it does not because QBO automatically adjusts this expense transaction to reverse it.

 

Specifically, creating this zero expense should result in 2 inventory entries for the relevant inventory item:

    One entry to bring in a single unit of inventory at a zero cost

    One entry to bring in a negative unit of inventory at the adjustment value

 

In my case, the process actually creates a third inventory transaction that includes zero inventory items at the negative value of the adjustment value. I cannot find any way to remove this automatically-created adjustment entry (since it is a hidden part of the inventory entry I created above), and it reverses what we are trying to accomplish.

 

It's very frustrating, since QBO does not permit users to make entries with zero inventory items if the value is non-zero, but it has no qualms about doing this on its own. If users could do the same, we could resolve the inventory problem ourselves.

Malcolm Ziman
Level 10

Adjust inventory value in QBO


@keeperdavid wrote:

 

 

In my case, the process actually creates a third inventory transaction that includes zero inventory items at the negative value of the adjustment value. I cannot find any way to remove this automatically-created adjustment entry (since it is a hidden part of the inventory entry I created above), and it reverses what we are trying to accomplish.

.


I don't see how there can be another line (hidden? - no such thing) in the entry you created because then the net amount of the transaction would not be zero.

Click More>Transaction Journal at the bottom to see the accounts affected.

 

If it's a separate transaction then you could find it and delete it

 

 

vpcontroller
Level 11

Adjust inventory value in QBO


@keeperdavid wrote:

 

"In my case, the process actually creates a third inventory transaction that includes zero inventory items at the negative value of the adjustment value. I cannot find any way to remove this automatically-created adjustment entry (since it is a hidden part of the inventory entry I created above), and it reverses what we are trying to accomplish."


Correct. That's what happens.

Whoever suggested this, should have tested this before making this look good workaround.

Some of us have known this (inventory value adjustment) glitch in QBO for years and years.

 

 

keeperdavid
Level 3

Adjust inventory value in QBO


@Malcolm Ziman wrote:.

I don't see how there can be another line (hidden? - no such thing) in the entry you created because then the net amount of the transaction would not be zero.

Click More>Transaction Journal at the bottom to see the accounts affected.

 

If it's a separate transaction then you could find it and delete it

 


I think the net amount is not zero because the system offsets its unwelcome inventory entry against COGS. 

 

To back up a bit, the problem is that the Inventory value is showing a total of $-0.01 for zero of a specific inventory item. To correct this, the entry I created is an expense transaction containing the following 3 lines:

 

ITEM/CATEGORYQUANTITYRATETOTAL
(inventory item)10.000.00
(inventory item)-1-0.010.01
Rounding/Adjustments (category)  -0.01

The total amount of this transaction is zero, and this is happening in a clearing account.

The above 3 lines are the only entries appearing in this transaction.

 

The result of this transaction is the following changes to the Inventory Valuation Detail report:

 QTYUnit Price/RateFIFO CostQty On HandAsset Value
Beginning Balance   0.00-0.01
16/04/20191.000.000.001.00-0.01
16/04/2019-1.00-0.010.010.000.00
16/04/20190.00-0.01-0.010.00-0.01

It's that last line that's reversing what we want to do. The message popups within QBO imply that it should not be possible to have a line item with zero quantity and a non-zero value, but this is what the system is creating.

 

Thanks for the tip about viewing the Transaction Journal from within the transaction. Opening this revealed the following transactions created by the system:

ACCOUNTDEBITCREDITNote
Clearing account0.00 expected
Inventory0.00 expected
Cost of goods sold0.01 unexpected
Inventory 0.01unexpected
Inventory0.01 expected
Rounding/Adjustments 0.01expected

 

The two "unexpected" lines do not appear when creating or editing the expense transaction.

Can you help us understand how we can edit these 2 items to remove them from the transaction? (Or perhaps there is an alternative solution?)

 

Since these 2 items do not appear in the expense transaction (attached), we can't figure out how to delete them without deleting the entire transaction.

aharris999
Level 2

Adjust inventory value in QBO

Agreed,  I tested this last week and it produced the exact behavior that KeeperDavid described.  The solution did not work.

Anonymous
Not applicable

Adjust inventory value in QBO

Hello, @aharris999.

 

Allow me to chime in the discussion and help share another workaround to fix the asset value that still has balance even if the quantity asset is already zero.

 

On the Inventory Valuation Detail report, filter that specific item and try to narrow it down in date scope to zero in on a transaction that caused the valuation to go out of whack. Then, edit that transaction so that the  FIFO costing will be reevaluated from that transaction date onward.

 

Find the starting value adjustment transaction for the item in question. Add a test memo to this starting value adjustment transaction and Save.

 

I'm hoping this suggested workaround resolves your issue.

 

Please know I'm always here to help if you have other questions about your inventory. Have a good one.

vpcontroller
Level 11

Adjust inventory value in QBO

@Anonymous 

 

Subject: Inventory Value Adjustment Only (NOT QUANTITY)

 

Joining the discussion is always good but only if you know what you're talking about and can contribute something good to the discussion. 

 

I reviewed your answer. With due respect, it seems you need some direct guidance from someone who has expertise in INVENTORY deep at Intuit. In the meantime, just learn from this discussion. There is no need for anyone from the QuickBooks Team to answer this unless they understand the question and the solution that works.  

 

That's what I think. Thanks for reading!

keeperdavid
Level 3

Adjust inventory value in QBO

(sorry, duplicate post)

keeperdavid
Level 3

Adjust inventory value in QBO

(sorry, duplicate post)

keeperdavid
Level 3

Adjust inventory value in QBO

@Anonymous wrote:

On the Inventory Valuation Detail report, filter that specific item and try to narrow it down in date scope to zero in on a transaction that caused the valuation to go out of whack. Then, edit that transaction so that the  FIFO costing will be reevaluated from that transaction date onward.

 

Find the starting value adjustment transaction for the item in question. Add a test memo to this starting value adjustment transaction and Save.


Thanks, but this did not work because the system adjusts COGS to reverse the change to inventory value.

 

We were hoping just to make a simple inventory value adjustment entry to resolve this, but can't find a way to do it.

 

I spent 1 hour 20 minutes chatting with support today.

They took control of the system and attempted several different ways to fix the issue: changing the exchange rates, the value of the product on the bill, the value of the product on the invoice, the starting value for inventory, and combinations thereof.

 

In every case, the system's entry to COGS is off by one cent on the sale transaction (one cent too expensive), and nothing we tried would fix this problem. The system consistently removes $72.72 out of inventory when there is only $72.71 in inventory to begin with (or it removes $72.73 out of inventory if we adjust the incoming inventory value to $72.72).

 

The case has been escalated to the product engineers.

I referred the rep to this discussion, since it contains a lot of information about things that have already been tried.

 

Maybe I'm too conservative in my accounting approach, but I am only comfortable correcting things like this by making adjustment entries. I am surprised that an accounting software / service company would want things fixed by directly editing old transactions for accounts that have been closed, audited, taxed, issued to Directors, and collecting dust for a year.

keeperdavid
Level 3

Adjust inventory value in QBO

(sorry, duplicate post)

keeperdavid
Level 3

Adjust inventory value in QBO

I have found a solution on my own that solved the problem in our system.

Unsure if it will work for others.

 

I had several exchanges with support back in April and early May, including sending screenshots and reports for analysis. After receiving no response since early May, I sent a couple of emails asking for an update.

 

Support has indicated that this problem is still under investigation by the product engineers because (at least in my case) it is due to a problem with currency rounding.

It's possible that other people with this problem have a different cause, but that's apparently what is creating the problem I'm seeing.

 

Since we are now at the end of our financial year and we have a few separate inventory items that are all experiencing this problem, and because (from where I sit) I can't see any movement towards a solution, I spent some more time experimenting with entries.

 

Here is the entry that I used to fix this problem in our system:

 

EXPENSE TRANSACTION

Payee: [The same supplier, or possibly any supplier using the same currency as the transaction that created the problem]

Payment account: [I just used the clearing account connected to our transaction account]

Currency: 1 USD = 1.390241 AUD

(Note: Our home currency is AUD, and the foreign currency for us is USD.)

Category or Product/ServiceDescriptionQTYRateAmount  in USD (foreign currency)
Rounding and adjustmentsAdjustment of inventory value to reflect zero items at zero value  -0.01
[Inventory item][inventory item]-10.01-0.01
[inventory item][inventory item]10.020.02

 

I repeated the above expense transaction for each affected inventory item, and all inventory items with no items in stock are now showing 0.00 as their values instead of -0.01

 

Because the problem was due to rounding errors in foreign exchange transactions, the exchange rate I've used above was possibly important. I haven't tested this enough to be sure.

 

For those interested, the journal transaction arising from the above is as follows:

AccountDebitCredit
Clearing account for bank transactions0.00 
Cost of goods sold0.01 
Inventory 0.01
Inventory 0.01
Inventory0.03 
Rounding and adjustments 0.01
Exchange Gain or Loss 0.01
TOTAL0.040.04

That "Exchange Gain or Loss" line could be the key here, so that's why the exchange rate might be important. If not for that line, I think inventory value would just go right back to where we started, and we'd be left with -0.01 for that item again.

 

I hope this helps someone!

chriystal23
Level 1

Adjust inventory value in QBO

Hi 

Have QBO found a solution to this issue ? 

Please let me know. 

Thanks. 

AlexV
QuickBooks Team

Adjust inventory value in QBO

Hi chriystal23!

 

Thanks for joining us here. I understand that you need to make an inventory value adjustment that isn't possible yet in QuickBooks Online. 

 

Our product engineers are always looking for more ways so we can meet your business needs. You can also send feedback about this. Go to the Gear icon and select Feedback. If there are new features added, we'll release an article or post it on our blog.

 

You'll want to follow the workaround shared on this thread by creating an expense transaction. However, it's best to seek some help from your accountant.

 

I've added some links you can check. These will show you how to pull up sales and inventory reports and customize them:

 

Need more help? Please leave a reply again here. We'll respond as soon as we can.

chriystal23
Level 1

Adjust inventory value in QBO

Hi, 

 

I have tried your method to issue expense to adjust the inventory value but the system does not allow us to save entry which is negative in value. It must be 0 or greater. So your method does not works. 

Please advise. Thanks. 

chriystal23
Level 1

Adjust inventory value in QBO

Hi, 

Is there any other solution ? 

 

 

AileneA
QuickBooks Team

Adjust inventory value in QBO

Hello, chriystal23.  

 

As of this moment, the workaround shared by our all-star would be the best solution in the meantime. Since the workaround doesn't work on your end and adjust inventory value is not yet available in QuickBooks Online.

 

I understand the need for having this feature in QBO and this is a great idea to add in the program, so I'm personally taking note of this suggestion and send it to our developers. This helps them in deciding on what features might be added in their future product updates. 

 

Don't worry, if there are new updates about this topic, it will be communicated through in-product ads. You can also check out these links to be updated with the recent and upcoming changes for our QuickBooks products: 

 

 

 If you have any further questions or concerns, please don't hesitate and reach back out to me. I'm always here to help you. Stay safe!

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