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Experienced Member

How do I remove items from inventory that should never have been in inventory?

I run a consignment lot for commercial trucks and trailers. The prior managers had no clue how to use Quickbooks or had any accounting knowledge at all. Since I began, I've been trying to clean up our accounts and I've noticed quite a few discrepancies in our inventory, mainly because the owners have picked up their equipment and cancelled the consignment deal. The problem lies in that I'm no expert in Quickbooks and I relied on YouTube to aid me. Sometimes the equipment was added as a bill which showed that we had a lot of past-due bills to pay for equipment that we had not sold yet. So according to the reputable-looking Youtubers, I could delete bills and adjust the inventory through the Quantity/Value menu. The problem is that our P&L shows that we have a net income in the roughly -$1M ballpark, which is wrong.

 

How do I manage my inventory to fix this immediate issue and what can I do in the future for my consignment business to maintain a true inventory for items that I don't actually own?

Solved
Best answer 07-17-2019

Accepted Solutions
QuickBooks Team

Re: How do I remove items from inventory that should never have been in inventory?

Hi there, @CodyLandis.

 

Thanks for sharing your concern here in the Community. I can help provide some information on how to correct your inventory item and recording transactions in QuickBooks Desktop. 

 

I'd like to acknowledge your effort in sharing very detailed information about your concern. To correct the recording transactions in your QuickBooks, you'll need to delete the past due bills that weren't sold. To do this, follow the steps below:

  1. At the top menu bar, click Vendor.
  2. Select the Vendor Center.
  3. Click Transactions.
  4. Change the date range to All
  5. Select Bills.
  6. Open the unpaid bills.
  7. Click Delete, then select OK

Once done, since you sell items on consignments, you can set up QuickBooks accounts and items to track the types of consignment sales you have made and how much you have paid out to consignors. 

 

Here's how:

  1. In your Vendors list, create a new vendor for each consignment vendor.
  2. Create an income account called Consignment Sales to track the consignment sales separately from the rest of the products you sell.
  3. Create an Other asset account called Inventory on Consignment to track the inventory of the consignment products you sell.
  4. Set up consignment items for each consignment product (or group of products) you sell.
  5. Create or customize form templates to record all of your consignment sales. Include the Consignor column on the customized sales receipt or invoice.

By recording consignment sales, it will automatically correct your Profit and Loss net income. 

 

If you need further assistance with the steps, I recommend contacting our QuickBooks Desktop Support Team. They have additional tools to pull your account and do a screen-sharing. 

 

Here's how to contact our customer support:

  1. Select QuickBooks Desktop Help from the Help menu.
  2. You can also press F1 on your keyboard to bring up the same Help Panel. 
  3. In order to route you to the correct support expert, we need to know what type of question you have.
  4. Click Continue.
  5. We’ll provide you a few options. You choose which one is best for you.

This should get you on the right track. Please know that you're always welcome to post if you have additional questions about the inventory and recording transactions. Have a good one. 

 

2 Comments
QuickBooks Team

Re: How do I remove items from inventory that should never have been in inventory?

Hi there, @CodyLandis.

 

Thanks for sharing your concern here in the Community. I can help provide some information on how to correct your inventory item and recording transactions in QuickBooks Desktop. 

 

I'd like to acknowledge your effort in sharing very detailed information about your concern. To correct the recording transactions in your QuickBooks, you'll need to delete the past due bills that weren't sold. To do this, follow the steps below:

  1. At the top menu bar, click Vendor.
  2. Select the Vendor Center.
  3. Click Transactions.
  4. Change the date range to All
  5. Select Bills.
  6. Open the unpaid bills.
  7. Click Delete, then select OK

Once done, since you sell items on consignments, you can set up QuickBooks accounts and items to track the types of consignment sales you have made and how much you have paid out to consignors. 

 

Here's how:

  1. In your Vendors list, create a new vendor for each consignment vendor.
  2. Create an income account called Consignment Sales to track the consignment sales separately from the rest of the products you sell.
  3. Create an Other asset account called Inventory on Consignment to track the inventory of the consignment products you sell.
  4. Set up consignment items for each consignment product (or group of products) you sell.
  5. Create or customize form templates to record all of your consignment sales. Include the Consignor column on the customized sales receipt or invoice.

By recording consignment sales, it will automatically correct your Profit and Loss net income. 

 

If you need further assistance with the steps, I recommend contacting our QuickBooks Desktop Support Team. They have additional tools to pull your account and do a screen-sharing. 

 

Here's how to contact our customer support:

  1. Select QuickBooks Desktop Help from the Help menu.
  2. You can also press F1 on your keyboard to bring up the same Help Panel. 
  3. In order to route you to the correct support expert, we need to know what type of question you have.
  4. Click Continue.
  5. We’ll provide you a few options. You choose which one is best for you.

This should get you on the right track. Please know that you're always welcome to post if you have additional questions about the inventory and recording transactions. Have a good one. 

 

Established Community Backer ***

Re: How do I remove items from inventory that should never have been in inventory?


@CodyLandis wrote:

 So according to the reputable-looking Youtubers, I could delete bills and adjust the inventory through the Quantity/Value menu. The problem is that our P&L shows that we have a net income in the roughly -$1M ballpark, which is wrong.

 

How do I manage my inventory to fix this immediate issue and what can I do in the future for my consignment business to maintain a true inventory for items that I don't actually own?


Inventory items have qty and cost, when you sell or adjust lower an item qty, the cost of that item is posted to the adjusting account or COGS.

 

When the type of adjustment says qty only, that is telling you that the qty field is what you can adjust, not that cost will not be affected. The adjustments you made posted the costs of the items to the adjustment account, that is an expense which is what is driving your P&L negative.  The items have cost from the bill when you view the P&L in accrual basis, if you change to cash basis the cost of the items on a bill will only affect the P&L if the bill is paid for.

 

If you delete a paid bill, then the vendor now has a payment, a credit, negative a/p
deleting a bill that is not paid, means you never bought anything and removes the cost and qty of an inventory item that was on the bill

 

hopefully you made a back up before making large changes, always make a back up before any major changes. I would restore the back up and start from there. Personally I would start a new file.

 

Inventory is something you own, you do not own items placed on consignment, ergo those items are NOT inventory.

 

QB is not suited for consignment sales at all. I have a consignment shop and believe me when I say anything you see on the net about using QB for consignments is off base.