QB Enterprise - Bill Entry hitting Inventory AND COGS

@jhartekeyline 

Can you run a Transaction Journal report on the bill and post a screenshot?  That report will show you what accounts the bill is hitting.  Bills credit A/P and the accounts assigned to the bill (or mapped via the items) book the debit entry.  It's difficult to imagine a scenario where the bill entry is hitting both inventory and COGS.

A bill will generate an entry to COGS if you have over sold inventory into the negative. In that case the sales transaction (Invoice or Sales Receipt, for example) will include a best-guesstimate COGS amount based on the last known average cost for the item.

When you later purchase more items on a bill (or any purchase transaction), it will become the sole the basis for the average cost going forward - because you had no items on hand before the purchase. If the new cost is different than the best-guesstimate in the invoice, QuickBooks will create an adjustment to COGS that is associated with the bill to make up for the difference.

It does this because the bill date is after the sale date, and so updating the invoice would not only be inappropriate (changing your financials in a prior period, for example) it would also not actually work given how inventory cost is (correctly) calculated, by the using the costs on purchases and the quantities on sales over time, in date order.

@BigRedConsulting 

"A bill will generate an entry to COGS if you have over sold inventory into the negative."

OK, I see what you're saying - but that is the case only if the average cost used when the item is oversold is different than the cost of the same item(s) on the new bill.  That is where I was confused.  Thanks for the clarification.