Pay a Purchase Order and update product cost (QBO)

Thanks for sharing details, @jacky C.

I’m here to guide you on how to update your product cost. You’ll want to edit the item from the Product and Services tab. Before doing so, ensure the quantity of the item is zero before adjusting the cost value. This way, it’ll not override the cost value of the previous item. 

Adjusting the cost value of the item while their still stock left affects the initial value of your inventory. This can cause discrepancies in your reports. In this case, I’d recommend creating another item at a different cost. I’d also recommend consulting with your accountant for additional advice on the best action to take.

Nonetheless, here’s how to edit your product and service item in your QuickBooks Online (QBO) account:

1. Go to the Gear icon. 
2. Select Products and services.
3. Locate the product you want to adjust and click the Edit link under the ACTION column.
4. Adjust the cost of the item then click Save and close.

You can also read this article for more information: Adjust inventory quantity on hand in QuickBooks Online.

Additionally, you’ll want to refer to this article on how you can manage and track your inventory effectively in QBO: Set up and track your inventory in QuickBooks Online.

Let me know if there’s anything else I can help you with about managing your inventory. I’d be more than happy to work with you. Keep safe.

@JasroV 

Hello Jasro, thanks for the prompt reply

May I summarize our previous actions in QBO

1. new start  business and no inventory in the beginning

2. created the product master with ZERO inventory, we did not enter a cost for the product

3.. created PO to purchase the product from the supplier with a specific price per item

4. copied the PO to bill

5. paid the bill

What the purchase cost is not UPDATED in the product.

What should be the CORRECT step to increase inventory qty with COST.

Thank you for your advice again.

Jacky

Hello @JasroV 

Thank you for your reply,  I would like to clarify how QuickBooks add QTY and COST to the product after receiving a Purchase Order.

I would like to summarise my actions again.

1. start up business, there is no initial inventory

2. created product master with ZERO inventory

3. created Purchase order to buy products from supplier at a specific price per item

4. copied PO to bill

5. Paid the Bill

Why the product inventory is not updated with QTY and COST?

Please advise.  Thank you so much

Best regards.

Jacky C

Good day, @sychan,

Joining the thread to share some more information on how inventory works in QuickBooks Online.

The cost you assign to vendor transactions will not update the cost under Products and Services instantly. The only time your item costs are updated is through editing them manually like what JasroV cited in his answer.

This is because QuickBooks Online uses the Sources and Targets concept. For example, when you create an expense for an inventory, the source of the information is the Products and Service page where you initially set up its costing.

Since the entry will use the data from its source, the process can't be any other way around. That's the reason why anything you manually entered on the transaction, regardless if its the price or cost, will not make any changes to its source.

The process you're doing with inventory receiving is fine. The only thing you need to do if there are changes to the costing, is to do it manually. This is to ensure proper reporting for your financial statements and books.

Learn more about inventory tracking using the links below:

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

Let me know if you have other questions about this. I'll be right here if you need anything else. Have a good one!

hello @Jen_D 

thanks Jen for the explanations.

in future, when we purchase the same item at a different price, if I do not agree the way @JasroV advising to create another product (while the product still have stock qty), is there any way to work around?

we are unable to apply to QBO inventory and cost concept in our business.

this is making our operations extremely difficult.  I am seriously consider to stop using QBO since we just started the business.   please advise if there's any solutions.  Thank you so much

jacky c.

Dear @JessT 

Thank you for your message and such a relief for your explanations.

May I reconfirm with you that my previous procedures of stock-in is correct:

1. create product (SKU) in the master

2. create PO to supplier

3. copy PO to bill

4. paid the bill

If supplier changes the product price in future order, we just change the price in the PO.

Since QBO use FIFO approach, we can see the stock value details in stock value report, but in Product & Service Tab, the product cost will not be shown.

The calculation of COGS is automatic when we issue an invoice or sales memo.  We can view the transactions details in QBO standard or customised reports.  

Is the above assumption correct?

Kindly advise.  Thank you so much.

Regards,

Jacky C.

Quite an interesting topic.

There's no need to update the item's price on the PO.. Just enter the new price on the bill (or expense) transaction.

PO is non posting entry.

thank you @Charies_M 

sure I will go to the article suggested for further insights about this topic.  Thanks so much.

regards,
SY Chan 

Reading through this thread, JessT states that there is no need to update the Product and Services because that happens automatically when entering bills, but JasroV states that the Product and Services must be updated manually for the costs to change when the price of an item increases.  Which is it?

Both answers are correct, DonnaSanchez. I'm here to share some insights about updating the cost of the item.

When you create an expense transaction for your inventory items, the details depend on the details you've entered on the Products and Service page. Any changes made in the said entry will not reflect on the page. Therefore, we'll have to manually edit the cost of the items.

Aside from manually editing the prices, you can also follow the workaround shared by my colleague, JessT. For more details, please see this article: What is FIFO and How is it Used for Inventory Cost Accounting?.

Additionally, I've included these articles that'll help you manage and track your terms in QuickBooks Online:

• Set up and Track your Inventory
• Reorder Inventory or Supplies from Vendors
• Use Reports to See your Sales and Inventory Status

In case you'll need assistance in dealing with your items in QuickBooks, don't hesitate to get back on this thread. We're always here to help you.