Inventory item showing current Cost and Sell Price but once invoiced to customer, journal entry showing $0.00 in COGS

jhartekeyline · ‎April 14, 2022

Please see attached pictures

As you can see on the first screen shot.
This is from the invoice to my customer. As you can see it shows the Product Name, the Quantity Shipped,
Sell Price $275.00, Cost $176.7975

Second photo is the transaction journal - As you can see the item hits the Merchandise Sale Account, but then hits the Inventory Assets and COGS as $0.00. HOW IS THIS HAPPENING!?

Again, my COGS is now WAYYY below what it should be.
Can anyone help! It is our year end and our COGS is not accuretly reflected.

Thank you in advance

BigRedConsulting · ‎April 14, 2022

The cost entered on inventory items is just the default purchase price, which you'll see when you purchase the item on a bill or check or credit card charge. And then you can change it to suit.

However, the COGS recorded on a sale is based on your actual cost, entered when you purchased the item. For most QuickBooks companies, the cost is calculated using the average cost method. When using the advanced inventory feature the cost can optionally use the FIFO method.

The only way to get a 0.00 cost is if you haven't purchased the item or you did purchase it, but with a 0.00 cost (which is unusual, but technically possible.)

View solution in original post

BigRedConsulting · ‎April 14, 2022

The cost entered on inventory items is just the default purchase price, which you'll see when you purchase the item on a bill or check or credit card charge. And then you can change it to suit.

However, the COGS recorded on a sale is based on your actual cost, entered when you purchased the item. For most QuickBooks companies, the cost is calculated using the average cost method. When using the advanced inventory feature the cost can optionally use the FIFO method.

The only way to get a 0.00 cost is if you haven't purchased the item or you did purchase it, but with a 0.00 cost (which is unusual, but technically possible.)

tj7801 · ‎March 23, 2023

So how do you change the average cost?

Lmcfadden · ‎June 05, 2023

I have the same issue - COGS for an inventory item is $0.00 on the invoice transaction. The invoice deducts the quantity from the Inventory asset account, but records $0.00 for the average cost of the item. The item was received with a cost of $280.00 per unit. As a result, inventory value is overstated and Cost of Golds Sold (COGS) account is understated. This only happening with one inventory item, other items are calculating correctly.

JaeAnnC · ‎June 05, 2023

I appreciate you for chiming in on this thread, @Lmcfadden. I'm here to help you resolve the issue with your cost of goods sold appearing as zero on the invoice transaction of your QuickBooks Desktop (QBDT) account.

Since the zero COGS only affects one inventory item, we can utilize the verify and rebuild tool to check your company file for data damage and repair them.

To verify your company data:

Go to Window and select Close All.
Select File, then Utilities.
Click Verify Data.

Here's how to rebuild:

Go to File, select Utilities, and then select Rebuild Data.
Press OK when QBDT asks to make a backup. Choose where to save it and click OK.
Select OK if you get the message Rebuild has completed.

Run the Verify Data tool once more to confirm that there is no further damage.

Moreover, QBDT updates inventory quantities and value as you track every purchase and sale. But you might have to record an adjustment now and then to keep your inventory status accurate.

Keep in touch whenever you have additional queries managing your inventory in QBDT. The Community is open 24/7 to assist you further. I hope you have a good day!

Topics

Training

Community

Resources

Inventory item showing current Cost and Sell Price but once invoiced to customer, journal entry showing $0.00 in COGS