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Buy nowWe have had inventory on hand for 5 years that has never been tracked outside of entering the expense on the P&L when it was purchased. This was due to previous management thinking we were not large enough back then to have to track it. The inventory is not for resell. Instead, it is for internal usage. Think hospitals needing to track their medical supplies as they use them. I know how to make adjustments as inventory is used. My issue is that I now will be tracking the inventory value on the balance sheet and will make adjusting entries at each month end once I know how much was used. But, how do I introduce my inventory amount to the books? I can't offset against an expense (COGS) account as the inventory purchases were expensed along the way as they were bought. Do I need to offset against something like a "prior year" expense account? I really don't want to do that because I feel it will overstate the expenses. Please help. I have also reached out to a CPA friend, but it seems as though I'm stumping people. Google searches only want to advise about inventory for resell.
since the inventory was expensed back when it was purchased, it has no value now
just use it as needed until it is gone, there is no accounting entry to make for those items already expensed
I just had a thought. Well two. One is that I didn't mean COGS (as we are not selling), I meant lab expenses. Anyway, the other thought was: would I be able to debit inventory and credit the expense account? This way, the amount we have on hand would sit on the balance sheet and since it should not have been expensed along the way, that would justify the credit to the expense account, right? Because if I were to purchase an inventory item today, it would credit the cash and debit the inventory asset account, correct? So instead of crediting cash, I would just credit whatever expense account was used. Would that make sense?
I have a similar situation. We are a property management company and purchase items for unit repairs such as faucets, lights, flooring, etc., when they are on sale. I add these items to my inventory, but I do not expense them until they are actually used. I need to then reduce the stock and charge them to a building (each building is set up as a class). I though I had solved the problem by just doing an "inventory adjustment", but when I do this I am having some issues: Say I am removing a sink faucet that costs $25. I reduce the inventory by 1 and choose the class, it is charging $25 to that class, but for some reason it is also crediting that class $25. So instead of showing as an expense against the class it is just zeroing out. It is also not showing up on my expense tab, but it is reducing the "inventory on hand" account. Any ideas?
Hey there, @ang3518.
Did you create any transaction for the sink faucet item? If so, can you share it with me so I can test and verify it with my test account? Any further details would be much appreciated.
Once you create an inventory adjustment, QuickBooks Online automatically records appropriate adjustments to your stock Asset and Cost of Goods Sold (under stock Shrinkage) accounts.
You've mentioned that you reduce your inventory by 1 and selected a class. A $25 charge was created but it also credited $25 to it. Can you also share with me the report you're using to get this data?
If you create any transactions for this item, then this will only affect its inventory. Though, this shouldn't create any charged amount for that item.
However, you can still edit your inventory adjustment entries in QuickBooks. This way, you can correct your data. Here's how:
Please take note that this can greatly impact your accounting data. I'd recommend reaching out to your accountant for further guidance on this matter.
Moreover, you can check out this article for additional info with regards to adjusting inventory quantity in QuickBooks: Enter an inventory quantity adjustment in QBO.
The Community always has your back, so please let me know if you have any other questions. I'll be more than happy to help. Keep safe.
There are no other transactions associated with the faucet except adding it to inventory on hand and now reducing the inventory from 1 to 0. I am seeing this credit and expense when I look at my class list report.
Thank you!
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