Inventory Management

You have two options.  If you issue a credit memo using an inventory item, it will add the item back into stock.  At that point you need to make an inventory adjustment, reducing the quantity and value and adjust against Cost of Goods Sold.

Easier to create an item, not an inventory item, and issue your credit memo using this item.  You have already reduced the inventory and cost of goods when the original invoice was created.  You item should only point to a revenue account.  

Hi @Judy32,

In QuickBooks, you'll need to have your damaged items recorded back into your inventory. However, I'd still recommend consulting with an account to make sure you process your damage items correctly.

Feel free to visit this link to find an accountant: https://quickbooks.intuit.com/find-an-accountant/.

You can also check this article about advanced inventory that I'm sure you'll find helpful. It has details on how to track inventory stored at different sites or locations. Here's the link: Set up Advanced Inventory.

Stay in touch if you have other questions or concerns. We're always here to lend a hand. Thanks for joining us and have a good day.