Inventory and Product Testing

Hi @waxglass2020 , i think you could entry in inventory first, then reverse it to expense for product testing. Dr inventory cr cash, then dr expense cr inventory. Comment back, cheers.

hi @waxglass2020 

for purchasing, you do record as usual to record all the inventory you will sell and use for testing, its to match between invoice, real stock and bookkeeping.

for the case that you want to record for testing account, i find some relatable article which has same problem like yours, their answer is as below : 

I can help share some information about recording an item that you use internally.

If the items were used personally, then you should not be selling this product to yourself. This item will be considered as an expense and should be non-taxable. However, it would still depend if your state requires you to do so.

In your case, you can do an inventory adjustment to lower the quantity of items taken for personal use. Here's how:

1. Go to the Lists menu and select the Item List.
2. On the Activities tab, click the drop-down arrow and select Adjust Quantity/Value on Hand.
3. Select the Adjustment Account by clicking the drop-down arrow. Please consult your accountant to ensure the account recorded is the right account for your business.
4. Select the item used and record the New Quantity and Qty Difference.
5. Once done, click Save & Close.

full link of the article : 
https://quickbooks.intuit.com/learn-support/en-us/reports-and-accounting/how-do-i-track-damaged-inve...

hope this helps :)

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@waxglass2020 wrote:

We started a candle company. Our inventory includes wax, wicks, vessels,  and fragrance oils. Some of these items are used for product testing. For example, our wicks come in quantities of 100, but we may use 30 of them for product testing. We created an expense account for product testing. Should we enter everything as inventory when it received in and then move it to product testing as we check inventory? If so, we are not sure how we move it from inventory to product testing. I understand we can adjust inventory quantities, but not sure how to get it to the product testing expense account. If there is a recommendation on how to do this differently, that would be great. The goal is to make sure we keep inventory and also allocate to product testing. Thanks!

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@waxglass2020 

Should we enter everything as inventory when it received in and then move it to product testing as we check inventory?

Yes. The process is fairly simple.

1. Create New Item List for Product Testing. For the Income Account field instead of selecting an income account, you select the Product Testing account you created.

2. Create a Zero Invoice. You will enter Quantity but for the Price, enter zero amount. Save. This will reduce your inventory and expense it to the product testing account.

I hope this helps!

Thanks for the help!

Are you saying I need to enter a New Product Testing Item for each product or just one New Item, Non-Inventory Part, called Product Testing?

Also, I guess I am confused on creating the zero invoice, although, depending on how you answer the above question, it would make more sense. If I have just one Item called Product Testing, then how would it pull from each inventory item quantities? 

I am sure it is really simple, but I am still lost. I used to work with Quickbooks for a service industry, which was no problem, but this inventory stuff is challenging. Thanks!

Hello there, @waxglass2020.

I can share additional information so you'd be able to successfully keep track of your inventory items in QuickBooks.

Yes, you'd want to create a sub-item for each inventory item to denote that its for product testing. Then, make sure to associate it with the Product Testing Income account. By doing this, you'd be able to run item inventory reports related to your product testings.

On the other hand, when you create an invoice with a zero dollar amount you'd want to make sure to enter all the items used as Product testing.  

By doing this, it will decrease the quantity on hand of each item. Also, it will increase the expense account used in tracking your product testing.

I want to ensure that this gets taken care of for you. Feel free to leave a comment below if you have other questions about tracking your inventory and non-inventory items in QuickBooks.

The print screens on how to set-up the item inventory and invoice were very helpful. However, I guess I do not understand how the invoice takes a quantity from Product Testing, if there are no quantities to start with in product testing. 

For example, an invoice for 100 CD4 Wicks is received and entered. The item selected is CD4 Wicks (Not CD4 Product Testing). We then use 10 wicks for Product Testing. How do the 10 wicks get moved from the regular CD4 Wick Item Inventory to the CD4 Product Testing Item Inventory? I do not see that the invoice does this. Thanks again!

It makes sense to me up until the point of moving the 10 quantities of CD4 Wicks. Thanks!

Attached is the current inventory item list we have recorded. 

I understand the concept of creating the Item, Product Testing, and using Product Testing as the Income Account. I do not understand how the quantities would move from the Inventory Part to Product Testing via the invoice. When invoicing, if the item code is one from Product Testing, then how would it pull from the regular, Item Inventory Part. For example, if I have WICKS, CD-16, Inventory Part, Merchandise Sales. This is where I recorded the inventory from the invoice. You mentioned to create item  for product testing, for example, WICKS (Product Testing), CD-16, Inventory Part, Product Testing, how do we move the quantities from one to the other using the invoice method? Thanks

Let me join the conversation, @waxglass2020.

Allow me to share some information on how Inventory works in QuickBooks Desktop.

The quantities won’t move using sales transactions. You can only create an invoice if you keep inventory on stock, and customers pick the items up from you. This way, QuickBooks records each inventory related to the transaction and adjusts the inventory quantity accordingly. 

You’ll need to adjust the product’s quantity to track the decrease or increase of items. You can create a separate account in your Chart of Accounts to modify the quantity on hand and the total value.

Here’s how:

1. Go to your Company menu, then Chart of Accounts.
2. From the Account dropdown, choose New.
3. From the Other Account Types dropdown, select Cost of Goods Sold.
4. You can name this Account as "Inventory Adjustments," then Save and Close.

Once done, you can follow the step 3 process located in this article to adjust items quantity and value in QuickBooks Desktop.

Running inventory reports also help to ensure everything is entered in the system correctly: Customize reports in QuickBooks Desktop.

Just leave a comment below if you have other concerns.  You can count on me anytime. Take care.

Thanks for your help. We need inventory to go into a Product Testing expense account. We are using Inventory Assembly and Bill of Materials in order to create a final product. I assume there is a way to use this as well to Assemble things into Product Testing, but I am having trouble figuring it out. The final product will always be a candle, but some candles are used for Product Testing (never sold) and some candles are sold. 

Allow me to jump in on this thread, @waxglass2020.

As my colleague mentioned, you'll have to create a new item list for your Product Testing. On the Income Account field, select the Product Testing account you created. Also, for the Zero invoice, you'll have to enter the quantity but put zero on the amount field. This helps reduce the inventory and increase the expense account used in tracking your product testing.

Additionally, feel free to visit our Help articles page if you have other QuickBooks concerns, such as setting up advanced reports, online banking, managing reconciliation, transactions, import and export data lists, etc.

I'm always here to help if you have any other concerns. I'll get back to you as soon as I can. Take care always.

Thanks! I am testing this out right now, but who do I list as my Customer. Product Testing? 

I am very sorry, but this is not working or I am doing something incorrectly. Attached is a PDF file of my steps. For these purposes, I will reference our 8 oz Black Metal Tin

When we receive inventory, the inventory is recorded into the applicable inventory account (Vendor, Enter Bills, Items, Select the Applicable Items, Quantity, Cost).  This was recorded as item 8 oz. Black Metal Tin (Merchandise Sales - Income Account).  Our total quantity is 150. Per your suggestion, I also added the 8 oz Black Metal Tin (Product Test) and used the Product Testing (Expense) for the Income account. I then created an invoice with the Customer Name, Product Testing. On this invoice, I selected the 8 oz Metal Tin (Product Test), Quantity 1, $0.00. Once this was completed, I returned to my Item List to see if the inventory was deducted from the the 8 oz Black Metal Tin, where it was originally recorded, and added to my 8 oz Black Metal Tin (Product Test). There was no change to the 8 oz Black Metal Tin, but there was a -1 recorded in the 8 oz Black Metal Tin (Product Test). 

In addition, the Product Testing Expense account recorded the 8 oz Black Metal Tin (Product Test), but with a $0.00 value. It did decrease the Inventory Asset account by the $2.57 cost of the tin. This process works well to decrease the value of the Inventory Asset account, but it is not properly recording the quantities on hand, meaning it is not moving quantities from the 8 oz Metal Tin Inventory Merchandise Sales Account and putting the quantities into the 8 oz Metal Inventory Product Testing account. This is the missing step. 

Any more thoughts?

Hi there, @waxglass2020.

You can create a sales receipt and enter it with a zero amount to check if the product testing is deducting from your inventory. Please follow these steps on how to create a sales receipt:

1. Go to the Customers menu.
2. Select Enter Sales Receipt.
3. Choose the customer in the field.
4. Select either Cash, Check, Credit/Debit, E-Check, or more.
5. Fill out the necessary fields needed.
6. Enter a zero amount in the Amount column.
7. Click Save and Close.

In case you need help tracking an inventory in multi-location in tracking inventory, you can read this article for more detailed information: Multiple Inventory Sites.

Please know that I'm always around here in the Community to help. Take care, and have a wonderful day!

Thanks! It does not take it from the original Inventory. When Inventory was received, it was recorded under the following item:

8 oz Black Metal Tin, Inventory Part (Type), Merchandise Sale (Account), Quantity 150

The step that keeps being recommended is to create a sales receipt/invoice, but to use the following item:

8 oz Black Metal (Product Testing), Inventory Part (Type), Product Testing (Account). There is no starting quantity. 

We need to move quantities from the original received inventory - so pull inventory from the 150 quantity and get it into the inventory item for product testing. which is currently at a 0 quantity. 

The recommended steps do not pull inventory from one item to another item in the item list. We also need these steps to properly affect the chart of accounts, i.e. inventory assets (asset account) and product testing (expense account)