Question

inventory write off

Forum|Forum|5 years ago
August 28, 2020
3 replies
49 views

HI if I need to write off an inventory item due to a loss or damage etc what is the correct way so that it shows im out the cost of the item as well as the quantity? It seems if the adjustment on hand using the Cost of goods sold account I dont see any change in my P&L or loss? Please help...

QuickBooks Enterprise Suite

G

gayatriluthfias20

Level 1

Hi @NauticalJim , Create a sub account of COGS called loss/theft/spoilage and use that account when you do an inventory adjustment. Lower the qty of items that need to be written off. Refresh qbo with clear cache and browsing history. You could use credit memo too for replacing inventory sent to customer. Please see the post and this post . Comment back, cheers.

AlexV

Level 10

Good to see you here, NauticalJim.

Let me assist you with your inventory.

The inventory adjustment is the right way to write off inventories. Also, you will need to select an Expense Account as the Adjustment Account to reflect this on your profit and loss report.

Please check this article for your reference on how to adjust your inventory quantity or value in QuickBooks Desktop.

Comment below if you need more help. Have a great day!

Jen_D

Level 8

Thanks for your answer but still a bit confused. I understand that if I sell something it takes out the inventory and applies the cost towards the sale. Inventory adjustment of damage should take out the cost as well as quantity so it shows a loss. Now another question would be if I sell something....gets damaged from Fedex or whatever carrier we use....comes back to us. Then we put in a claim for damage through insurance....and we get an amount that could be cost or more or less...how should we handle it? Currently we are adjusting the item out at zero dollars on the original invoice but keeping in the inventory number...if we get a check we are creating a credit memo putting the item at whatever amount they paid us for damages as well as any refund of delivery. But it appears that isnt going into an income account...Is there another (better)way of doing it? Thanks again.

Hi there, @NauticalJim,

I can share a few insights about the process of writing off inventory in QuickBooks. Inventory tracking uses different journal posting in your books when receiving inventories and selling them.

When you purchase or receive inventory, it debits the Inventory Asset account which is posted in the Balance Sheet report. If there are changes in the quantity because of damages, fire, theft, or breakage, and etc., that's when you use the adjustment option.

This method affects both the Asset and the COGS account, but not necessarily show a loss in your books. This is because, we are only changing the quantity and asset value of the item, but the average cost of the item remains the same. For example, if the average cost is 10 and you reduce the quantity by 2, QuickBooks reduces the value of the items on hand by 20.

If you want to track the loss in the P&L report, you will need to a different entry to account for the unrecoverable funds from damages. This is method is what we call writing off a bad debt. This article can explain the process and steps for you: Write off bad debt in QuickBooks Desktop

Regarding the other question about the insurance claims, there is a way I can suggest for you. You can set up the insurance company as a customer in QuickBooks, so you can transfer the balance from the original client and apply the claim as a payment. Here's how:

Step 1: Create a clearing account.

Go to the Lists menu and select Chart of Accounts.
Right-click anywhere and click New.
Choose Bank then enter the name Clearing Account as the Account Name.
Press Save & Close.

Step 2: Add the Insurance Company as customer.

From the Customers menu select Customer Center.
Right-click anywhere in the list the choose New.
Enter the agency's name in the Customer Name or Company Name field.
Lastly press OK.

Step 3: Create two journal entries to transfer the Balance.

Go to the Company menu and choose Make General Journal Entries.
On the first entry, credit Accounts Receivable and assign the original customers name and debit the Clearing Account.
For the second entry, credit the Clearing Account and debit Accounts Receivable. Choose the Insurance Company this time.

Step 4: Receive the payment.

Go to the Customers menu again and choose Receive Payments.
In the Receive From field, enter the insurance company.
Click the outstanding transaction on the result, then on the Payment column, enter the amount you received from them (not more than the invoice amount).
If you receive more, create a credit transaction for the remaining amount so you can apply it next time.
Otherwise, if you receive less, use the write off option for the loss.

Please note that these steps is just a workaround. We always recommend seeking help from an accountant for accounting help and guidance. We want to make sure your books are correct and there is no room for mistakes.

Let me know if you have any questions about this. Feel free to connect with me again by clicking the Reply button below. Have a great weekend!

M

Motor

Hello,

I am new to this community so I hope this is the right place to post a question. I have goods that I can't sell any more. How do I write off these inventory goods as an expense or as a loss?

Which are the specific accounts that must be affected? What is the mechanism in QB to do this?

What happens later if I am able to sell them at a price less that what I paid for them? How would I enter such a sale?

Thank you.

B

beckellh

I don't have an answer, just want to stay in the loop for this question, because I have the same one. Expired inventory that needs written off.

AlexV

Level 10

Hello beckellh!

You can make an inventory adjustment in QuickBooks Online. Let me show you how.

Make sure to set up an inventory adjustment account to track your adjustments. Follow these steps:

Go to the Lists menu and then Chart of Accounts.
Select the Account dropdown, then New.
From the Other Account Types dropdown, select Cost of Goods Sold.
Name this account “Inventory Adjustments”, and then Save and Close.

Once done, go to the Inventory menu and select Adjust Quantity/Value On Hand. Then, you can run the Inventory Valuation Summary report to verify that your inventory is now accurate. You can pull up this report when you hover over Inventory from the Reports menu.

Please check this article for more details on how to make an inventory adjustment: Adjust your inventory quantity or value in QuickBooks Desktop.

I'd be glad to help you if you have other concerns. Have a great day!

E

Eleanor Cleverence

This one's a bit of a puzzler, huh? let's dive in with some things you might check. You can print single labels fine, so the connection's gotta be okay. But multiple labels? Maybe there's a hiccup in the process queue or spooler.

I've seen cases where the print queue looks fine but has a backlog. One trick is clearing the print spooler on windows 10. Sometimes a stalled state happens if there's a "ghost" job in the queue, blocking new jobs. Head to services.msc for stopping the spooler, poke around in C:\windows\System32\spool\Printers, and ditch any files there before restarting.

Also, make sure your QuickBooks enterprise is up to date. Sometimes, printing quirks get patched in updates, so keeping QuickBooks and Zebra driver updated might solve it. Try tweaking the printing settings in QuickBooks, especially for your specific label format.

Now, while testing on Windows 11, check for any surprises. newer OS versions might handle USB stuff differently, and it may just skip over whatever glitch you're seeing now. Let me know how it goes or if you spot anything new!

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