Inventory Adjustment with New Cost

tburch · ‎February 21, 2023

One of my clients contributed to the company by purchasing additional inventory; this inventory had a different cost than the first purchase. I wanted to use the "Adjust qty" feature via the Products and Services list so that I could both add to the specific inventory item purchased and reflect the increase in equity.

The entry does not correctly calculate the new cost price when using the "Adjust qty" option via the Products and Services list.

I updated the product cost to the latest purchase batch ($6.625), which should have adjusted the specific inventory item from 40 units to 60 units, and the adjustment amount should have totaled $132.50 ($6.625*20 units). For some reason, it only correctly adjusts the units, and the dollar amount for the adjustment is incorrect (it totals $151.46 or $7.573 per unit).

How can I use the "Adjust qty" (NOT a purchase order or simple journal entry) to correctly update the inventory item?

Please see the relevant screenshots:

Rainflurry · ‎February 22, 2023

@tburch

Create an expense or check transaction for the items and use a bank Clearing Account as the payment method. If you don't have a Clearing Account, set one up. That will receive the items in inventory. Then, transfer the amount from the Clearing Account to the appropriate equity account. You can use a transfer (New > Transfer) or make a journal entry - debit Clearing Account and credit the appropriate equity account.

View solution in original post

DebSheenD · ‎February 21, 2023

Hello there, @tburch.

I'm here to share some details about changing the quantity of your inventory items in QuickBooks Online (QBO).

Normally, changing the quantity of your Inventory in QBO doesn't affect the cost of it. Ensure to check the as of date when editing it in QBO,

You can follow the steps below on how to add an inventory quantity adjustment:

Go to the + New button and tap Inventory Qty Adjustment.
On the Inventory Quantity Adjustment page that appears, set the Adjustment Date.
Proceed to the Inventory adjustment account drop-down and select the appropriate account.
Enter the products in the Product field drop-down.
Provide a new quantity or a change in quantity.
Click Save and close once you're done.

Here's the adjust inventory quantity on hand in QuickBooks Online article for more information.

Also, here’s more information on how to enter product and service items you buy and sell: Add product and service items to QuickBooks Online.

I'm always here if you have follow-up questions about inventory management. Take care and have a wonderful day!

Rainflurry · ‎February 22, 2023

@tburch

Create an expense or check transaction for the items and use a bank Clearing Account as the payment method. If you don't have a Clearing Account, set one up. That will receive the items in inventory. Then, transfer the amount from the Clearing Account to the appropriate equity account. You can use a transfer (New > Transfer) or make a journal entry - debit Clearing Account and credit the appropriate equity account.

FritzF · ‎March 06, 2023

Hi again, Rainflurry.

I appreciate you for always sharing your knowledge about QuickBooks. This will definitely help other users as well in the future. Please keep on posting here in the Community.

Keep safe and have a great rest of the day.

Eleanor Cleverence

i get where you're coming from. QuickBooks can be quirky when it comes to handling inventory adjustments with a new cost. When an item’s cost is diff from earlier purchases, the software doesn't recalculate costs on inventory adjustments. What's likely happening here is QuickBooks just defaults to the last cost recorded, not the new one you put in.

Now, here's a practical approach. First, check the cost in your Products adn Services. This shoud reflect the latest price. In QuickBooks, the "Adjust qty" feature mainly cares about inventory quantities, so the cost gets recalculated based on existing data instead of the new batch cost.

A workaround: after updating the product rate, create a manual inventory adjustment. Adjust the quantity to zero and then up again to show the new cost, forcing QuickBooks to re-adjust the average cost to your amount. It makes sure the cost recalculates individually for affected batches.

Keep an eye on teh cost adjustments to avoid financial report discrepancies. It's a bit cumbersome, but it can fix cost variances when the software's regular features fall short. If probs keep popping up, maybe reach out to a QuickBooks expert for more help or advice on using a plugin/add-on. Good luck!

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