Better Method for Recording Inventory Returns & Preorders
When entering an inventory return or inventory pre-order, QBO does not give you the flexibility to choose which account to post these transactions to. So, if you want to have these transactions go to different accounts you have to do work-arounds or additional journal entries.
This could easily be fixed by adding additional fields to the Inventory Item setup and edit screen in QBO as I've drawn out in the attached image (please see attached image).
For example, for each type:
Returns: When you want to enter a return, you can enter a Credit Memo that has the inventory item, along with the quantity and amount, you want returned. QBO will apply the credit and associated transactions to the G/L accounts assigned to that inventory item during it's setup which is usually "Revenues" and "Cost of Goods Sold" accounts. However, what if you wanted to apply the (net of the) transactions to a "Discounts/Refunds" account instead? The only options are to enter a reclass journal entry or to setup associated, but a second set of separate inventory items that are assigned to the "Discounts/Refunds" (as well as a few other steps). Both options are not preferred and cumbersome.
Preorders: When you want to enter an inventory pre-order with a Sales Receipt (or Invoice) that has the inventory item, along with the quantity and amount, pre-ordered and QBO will apply the pre-order and associated transactions to the G/L accounts assigned to that inventory item during it's setup which is usually "Revenues" and "Cost of Goods Sold" accounts. This would be incorrect, because pre-orders are "Unearned/Deferred Revenues" which is a liability. The only options are to (again) enter a reclass journal entry or (as normally suggested by other QBO articles) to setup associated, but a second set of separate inventory items that are assigned to the "Unearned/Deferred Revenues" (as well as a few other steps). Again, both options are not preferred and cumbersome.
I have a suggestion that would be a better way to handle both the inventory returns and inventory pre-order scenarios. It requires QBO to make an enhancement or add additional features.
When adding or editing Inventory items, in addition to selecting the "Income account" and "Expense account" options, I request that QBO please also add the following:
1) For returns/refunds, for Inventory items, add an "Income account for returns/funds" option under the sales information section and an "Expense account for returns/funds" under the expense information section.
2) For pre-orders, for Inventory items, add an "Asset or deposit account for pre-orders" option under the sales information section and a "Liability account for pre-orders" under the expense information section.
Then, of course, in the background apply the appropriate transactions.
How can we get this done? Do others agree so we can get Intuit to do this tomorrow? =)
Thanks for attaching a screenshot and for sharing a workaround. Your thoughts and opinion really matter to us. Credit Memo and Sales Receipts (or invoice) can be used to record inventory returns and preorders in QuickBooks Online (QBO).
Currently, there isn't an option to have these transactions go to a different accounts. Rest assured I’ll take note of this feature request and pass it along to our product engineers. They're always looking for ways in improving our products to suits the needs of our customers. Your suggestion will surely be on their top list.
While I can’t provide you a specific time frame as to when this feature will be available. I recommend checking our QuickBooks Blog page regularly. There, you’ll stay updated on the latest news and happenings in QuickBooks.
Furthermore, we have articles that you can read for your future reference. Visit our QuickBooks Support page and browse a topic from there.
In case you have other follow-up questions or other concerns about managing your inventory in QBO, you can always post a reply in this thread. I’d be more than happy to assist you. Keep safe and stay well.