cancel
Showing results for 
Search instead for 
Did you mean: 
beckellh
Level 2

Beginning Balance Equity entries for inventory in QBD Pro 2020

1.  The beginning balances were entered as we put in the inventory as of 12/31/2021.  The entry that was automatically done was DR Inventory Asset and CR Opening Balance Equity (was originally being tracked in Excel and balances matched).  

2.  QB automatically closed 2021.

3.  Credit card statement comes in and some of the previously recorded inventory (was received prior to January but put on the credit card in January 2022).  Since the inventory attached to this charge has already been accounted for (in the entry from 1 above), what is the entry to get the charge posted?  I know I CR the credit card, but what account do I DR?  I can't do Opening Balance Equity, because it's a normal CR balance, so is it COGS?

Solved
Best answer February 21, 2022

Best Answers
Rustler
Level 15

Beginning Balance Equity entries for inventory in QBD Pro 2020

When you buy inventory items, you select each item the qty and the total cost - that stocks the item.

 

When you do that you select either the bank to pay for it, or a credit card account

 

then you pay the CC.  It makes no difference when the CC is paid, the date that counts is when you enter the charge.  

 

The problem is that QB thinks you have the item on hand because you said you did with an opening balance, and now with a CC charge you are stocking more of that item.  

 

If you are trying to use journal entries, stop.  journal entries often do not work as expected and do not show in some reports.  Additionally items are stocked by name, think of the names as sub accounts of inventory asset, so nothing gets posted to inventory asset.  That is another reason you can not use journal entries, you can not select the item in a journal entry

View solution in original post

4 Comments 4
Rustler
Level 15

Beginning Balance Equity entries for inventory in QBD Pro 2020

Beginning balances for inventory items should ONLY be entered if the item is on hand.

NO the CC does not offset to COGS, COGS is the item cost for things that are sold.

Buying inventory is a debit to inventory asset>item, and a credit to the CC. Never ever use inventory asset in any kind of transaction.

Use a quick report for the item, drill down on the opening entry and edit it to a zero on hand and zero cost. Then buy the items

 

beckellh
Level 2

Beginning Balance Equity entries for inventory in QBD Pro 2020

Thanks for your help; however, the items were bought PRIOR to 12/31/21 and were included in the inventory count on 12/31/21.  The charge on the CC in question was paid on terms of Net30.  I'm not trying to add anything to inventory, just figure out what the DR account should be so I can get the CC charges entered into the GL.  I'm doing all this after the fact.  My hubby was doing everything in Excel and I'm trying to get it all into QB so it's more accurate.  We just started an online business last year and it took this long to convince him that QBs was a better and wiser choice. :-)

Rustler
Level 15

Beginning Balance Equity entries for inventory in QBD Pro 2020

When you buy inventory items, you select each item the qty and the total cost - that stocks the item.

 

When you do that you select either the bank to pay for it, or a credit card account

 

then you pay the CC.  It makes no difference when the CC is paid, the date that counts is when you enter the charge.  

 

The problem is that QB thinks you have the item on hand because you said you did with an opening balance, and now with a CC charge you are stocking more of that item.  

 

If you are trying to use journal entries, stop.  journal entries often do not work as expected and do not show in some reports.  Additionally items are stocked by name, think of the names as sub accounts of inventory asset, so nothing gets posted to inventory asset.  That is another reason you can not use journal entries, you can not select the item in a journal entry

beckellh
Level 2

Beginning Balance Equity entries for inventory in QBD Pro 2020

OK, I get what you're saying.  This is my "Normal" process when my husband orders inventory.  I put in the PO, wait for the items to arrive, receive the inventory and then add the bill.  When the charge shows on the CC, I then mark the invoice paid.  But because this happened last year, I'm making it more difficult that it needs to be, right?

So to make sure I understand what I need to do to fix this issue is what you said at the beginning.  Get the original PO and zero out the items on that PO, then re-enter.  These items were adding to items already in stock.  For example, we had only one xyz candybar in stock, this order was adding four of xyz candybars so we didn't run out.  Now we have five; what you're saying to do is to change the beginning entry back to one candybar, add the PO, receive the product, enter a bill, then pay that bill with the CC using the date it hit on the CC statement.  This makes perfect sense to me and shows an audit trail.  How will this affect the YE closing that QB automatically does and has already done?  Also, when all is said and done, if done correctly, the inventory valuation should still be the same amount.  I'm not really changing anything, just making the correct entry and NOT using a JE.  I know this is a long response, but I just need to know that I understand it so I don't have to keep making corrections.  It's been 13 years since I've done any accounting (raising kids and taking care of a parent), and I'm realizing how much knowledge I've lost.  Thanks for your patience and help.

Need to get in touch?

Contact us