Inventory Management

Hi there, m_seale.

Thank you for visiting the QuickBooks Community. I'll be sharing steps to ensure you can view the correct total value of your inventory in QuickBooks Online.

The $24 total value will appear on your end if you created a purchase of 5 light bulbs at a cost of $3.00 and make a bill of 3 items at a cost of $3.00. Then, created again a purchased order of 5pcs. If that's the case the $24 will normally show in QuickBooks Online.

However, if you want to show the correct total value of the light bulbs, I suggest creating a purchase order of 5 light bulbs at a cost of $3.00. Then, make a bill for the said transaction and create an invoice for the sold 3 items you've mentioned.

Here's how:

1. Select + New, then choose Purchase order.
2. From the Vendor dropdown, select the vendor.
3. Enter the Purchase Order date.
4. Go to the Item details section and choose the light bulbs as the product name and enter 5 in the QTY field and $3.00 as an amount.
5. Fill in the other needed information.
6. Click Save and close.

Once done, create a bill for the purchased order you've created above to pay the entry.

After that, make an invoice for the sold 3 items in QuickBooks. Please follow the steps below:

1. Select + New and select Invoice.
2. Select Add customer and choose a customer from the ▼ dropdown. 
3. Review the Invoice date, Due date, and Terms. Enter new dates or terms, if you need to. Tip: In the Terms field, Net refers to the number of days until the payment is due. 
4. Choose light bulbs as a product or service and select a product or service from the ▼ dropdown.
5. Enter the 3 as QTY and the amount.
6. Click Save.

Once done, create again a purchase order for the ordered 5 more you've shared in your statement. Then, run the Inventory Valuation Detail report to see the correct total value. This way, you can now view the correct data of your inventory. Please know that if the last purchased order is 4 pcs at a cost of $4.00, the $22 will appear in your QuickBooks after following the steps above.

Furthermore, you can open this article to see information on how inventory transactions work in QuickBooks: Understand inventory assets and cost of goods sold tracking.

You can add a comment below if you still have concerns related to QuickBooks. I'm always around to help.

Thank you for the explanation.  This works in Desktop, but not in Online.  QBO does not have a FIFO option, unless I missed that. 

We appreciate your return to this discussion, @m_seale.

In QuickBooks Online, the FIFO option is available. The software will always regard the initial purchase (First In) as the initial sale (First Out). Every time sales of inventory items are recorded, this will adjust your assets and Cost of Goods Sold (COGS) accordingly.

You can also read this piece for additional information: What is FIFO, and how is it used for inventory cost accounting? It also includes an idea of how to modify the cost and initial quantity of an item.

To help you monitor and manage inventory in QuickBooks, I've gathered a few articles that you can read through:

• Set up and track your inventory in QuickBooks Online.
• Add inventory products in QuickBooks Online.

If you have any questions regarding FIFO in QBO, please let me know. I'll always be available to assist. Have a great day!

Thank you!  It was my understanding that QBO did not use FIFO.  So, when I receive the second batch of items at a new higher cost, should I update the item in "products & services", or should I only enter the new cost on the vendor bill paying for the items?