Inventory

It's great to see you here in the Community, @MRK9.

Allow me to share insights into your concern about how to correct your inventory adjustments.

To begin with, I wanted to ask what process was performed in recording the purchased bag of the client. If it was recorded as an invoice then the clients would be required to pay for it, since QuickBooks Desktop keeps track of every purchase and sale to update inventory quantities and value.

Creating an inventory adjustment decreases the inventory quantity but should not impact sales. Sales will only increase if an item is sold from the inventory without the inventory adjustment process.

If you did not record a purchase for your client and only adjusted your inventory, it will decrease the inventory quantity but not be added to sales.

Additionally, here are some articles that you can read to help speed up your workflow in QuickBooks Desktop:

Adjust your inventory quantity or value in QuickBooks Desktop

Thanks for giving us the details of your concern. I'm here to help some more if you have other questions about Inventory Adjusments in QuickBooks Desktop. Have a great day ahead!

Thank you for your prompt response. When we receive the shipment and pay the bill it does get recorded into inventory. We do issue an invoice for our clients purchases, hence reducing the inventory. When I do an inventory adjustment for what we use in house, my sales increase. I may be using incorrect catagories ie.. COG vs something else?? How do I fix that and start over?

Thanks for coming back and sharing the details of your concern, @MRK9.

In order to effectively manage inventory, it's important to have a good understanding of how QuickBooks deals with inventory assets, average cost, and Cost of Goods Sold (COGS). This article will guide you through the process of calculating the average cost and help you identify which report will be most useful for inventory management:

Understand inventory assets and cost of goods sold tracking

Inventory adjustment is the process of changing the quantity or rate of an item. It includes any increase or decrease in product quantity that is not due to a sale or purchase. 

Indeed, if you don't want to increase the sales for the in-house inventory you can create a separate item for this in QuickBooks Desktop. Then a separate item for those you bill to the client.

Note that it’s best to reach out to your accountant for advice before you adjust inventory value. 

Moreover, I'll be sharing this article to help you in your future work in QuickBooks Desktop:

Add, edit, and delete items in QuickBooks Desktop

How to set up inventory in QuickBooks Desktop

Feel free to reach out with other questions or concerns about Inventory in QuickBooks Desktop. I'll be glad to assist. Keep Safe!

@MRK9 

"When I do an inventory adjustment for what we use in house, my sales increase"

Something's amiss.  If you're reducing the quantity on-hand using an inventory adjustment (Vendors > Inventory Activities > Adjust Quantity/Value on Hand), sales cannot increase.  That's because a reduction in inventory value and an increase in sales are both credits from an accounting standpoint so both cannot happen in one entry.  Increasing inventory can increase sales but not the other way around.      

When you make the inventory adjustment for the food you use in-house, select the expense account you want to use to track it under 'Adjustment Account'.  I would suggest using a dedicated expense account that differentiates the food used in-house vs. COGS which is used to track the cost of food sold to your customers.  The bottom line is the same either way it's just that technically, the food used in-house is not COGS.   

That is what I thought. So, my (-) inventory adjustment shows the exact same amount as my sales incread by. I used a dedicated expense account "Inhouse use". I know I must be doing something wrong, but I don't know what or where.

@MRK9 

Go to Reports > Accountant & Taxes > Journal.  Click 'Customize Report'.  On the Display tab, select a date range that contains these inventory adjustments.  On the Filters tab, under 'Filter'' select 'Transaction Type'.  Under the Transaction Type drop-down menu, select 'Inventory Adjustment.  Click 'OK'.  That report will show you what other account is being affected by all of the inventory adjustments as well as whether the inventory account is being debited (increased) or credited (decreased).  The report will show that you cannot have an entry that increases (credits) sales and reduces (credits) inventory.  You can click on the journal entries to go to your inventory adjustment entries.  If you have any questions about it, post a screenshot of the report and I will try and assist further.      

Thank you all for the replys. I am obviously still doing something wrong. We are now swamped with the holiday season and this project is on hold. I will return to the forum and information after next week.