Reporting a loss of product

I'll guide you through the steps to report a loss of your product, @Jan_P.

In QuickBooks Desktop, you can report a loss of a product by creating a journal entry to account for the loss. To start, you'll need to create an account in the Chart of Accounts for the adjusting entry.

Here's how:

1. Go to the Lists menu and select Chart of Accounts.
2. Select the Account menu and then New.
3. Choose the account, then Continue.
4. Enter an Account Name.
5. Click Save and Close.

Once done, create a journal entry to track the unrecoverable funds. Let me guide you on how:

1. Go to the Company menu and select Make General Journal Entries.
2. In the Account column, choose the account you've created in the Chart of Accounts.
3. Enter the amount of the loss in the Debit column.
4. Fill out the fields to create your journal entry. Make sure your debits equal your credits when you’re done.
5. Select Save or Save & Close.

This approach will enable you to record the loss of products in your financial records without impacting your inventory. Additionally, I recommend consulting your accountant or bookkeeper if you're uncertain about the accounts to use or the specific details of the journal entry.

For more details about creating a journal entry, see this article: Create a journal entry in QuickBooks Desktop for Windows or Mac.

Also, I'll share this article about the different reports available in QBDT. Your financial reports give you a snapshot of your business and how the data displays from your company file: Understand reports in QuickBooks Desktop.

Please keep me posted on how it goes in the comments below. If there's anything else you need or concerns about reporting a loss of your product in QBDT, I'm always ready to help. Take care.

Thank you for that info.  When creating the account, should I do that as an expense?

Hello there, @Jan_P.

Allow me to chime in and provide information about creating an account in the Chart of Accounts in QuickBooks Online (QBO).

Yes, you can select the Expense account as the account type in tracking the bad debt. However, I suggest contacting your accountant for proper tracking.

Here's how:

1. Go to the Lists menu and select Chart of Accounts.
2. Select the Account menu and then New.
3. Select Expense as the account type and Continue.
4. Enter an Account Name and then click Save and Close.

After creating an account in the COA, please follow the steps given by my colleague to track the unrecoverable funds.

For future reference, I'll add this article to guide you in customizing the data, adding or deleting columns, adding or removing information on the header/footer, and even personalizing the font and style of the report: Customize reports.

Please feel free to reach us out again, if you have further concerns about creating an account in the COA or other QBDT-related concerns. We're always here to help you out.

@Jan_P 

The responses provided by @JoesemM and @Clark_B  sound like guesses and may not be right for your situation.   

If you don't track inventory in QB, how are you recording the purchase of inventory?  If you are expensing it at the time of purchase, there is no additional entry to be made to show the loss of the product because you already expensed the cost of that product when you purchased it.

If you assign the cost of inventory to your Inventory Asset account when purchased, you can make a journal entry: debit COGS (or spoilage or whatever expense account you want to use to track it) and credit Inventory Asset.  Or, if you take a physical inventory at year-end, then the cost will be expensed at that time because that product will not be included in your ending inventory and will be expensed to COGS.  

We manufacture sausage.  When we order the pork from our supplier we create a bill and pay them.  When we sell the sausage we invoice the customer.  I'm just not sure how to correctly report in QBD sausage that was either out-of-date or damaged.  

@Jan_P 

"When we order the pork from our supplier we create a bill and pay them."

What account do you assign to the supplier bills?  Is it an expense account?  If so, then you have fully expensed the cost of the product before you sell it to your customer.  Because you have already expensed it, you're not taking any loss on expired or damaged product, you're just losing revenue because you're unable to sell it.  Therefore, there is nothing to record when you dispose of expired or damaged product. 

If you're not assigning an expense account to your supplier bills, let me know because that may change things.  

So we assign pork to a "cost of goods sold" account.  How would that change how we handle the loss?  I appreciate you taking the time to help. 

Yes it does.  Thank you very much for your expertise.  

Hi, Rainflurry.

Thank you for always sharing your knowledge here in the Community. This will surely help other users as well in the future.

Stay safe and have a good one.

Rainflurry mentioned: Companies that record the cost of pork as inventory (an asset), need to make an entry to expense the cost of damaged/expired products because they have not expensed it yet. Since you are expensing it at the time of purchase, there is no further entry to be made. You can just dispose of the product. Make sense? 

I'm using inventory (Industrial parts). How can I report if one of the parts gets damaged in the warehouse? Parts are recorded as expenses from the suppliers. Parts are already in inventory.

How can I take out the part from inventory and now reduce the price paid months ago? The system automatically knows the price of the part in inventory, but how do we record it?
There is no information about how to record a product loss. Please provide another example of the first and last steps. We're tracking inventory.