To explain, I am accounting only, I am in no way involved in inventory management or entries. Newly thrown into managing the P&L, Trial balance, etc. When pulling information to close out the 2019 year. The COG's account was greatly misconstrued. Upon review, i found that build assemblies are crediting the COGS account and skewing the numbers. My accountant is currently at a loss and I have spent countless hours trying to hunt this down. A little more info is that the current Purchasing manager doing this is completing unaware of what could be throwing these numbers off or what she could be doing to cause this. I am unable to create an JE as I have no idea where this dollar amount is coming from. I am talking hundreds of thousands of dollars. Upon deeper review, i found that in the entry of the actual items entries, I found the sales acct and the expense account are BOTH PURCHASE COST OF GOODS. This is a years worth of item entries. To fix this would be hours and hours of entries in single user mode that I do not have. I wanted to simply do a JE to adjust Debiting the COGs account and crediting another account. However, i do not know what account to put this to. The actual invoice billed out correctly to sales. I cannot put to sales because this number would double. Please forgive, I have spend most of the day on this and I am just over it at the moment.
Thank you for posting here in the Community. I know how important it is to balance your accounting books. To help you fix this, you'll need to make sure the items included in the inventory assembly are set up correctly to their appropriate accounts. Let me guide you how:
The screenshots below show you the third to sixth step.
Let's do these steps in all your inventory and non-inventory items, as well as your inventory assembly itself, to make sure they are set up accordingly.
You might need to record an adjustment every now and then, you can refer to this link: Adjust your inventory quantity or value in QuickBooks Desktop.
Please know that I'm here anytime you have other concerns.
I apologize for the delay. I hope I can explain this enough to get the help I need. I am in accounting trying to help the purchasing manager understand the process. There are a couple of things going on here that I just can't wrap my head around. To explain what I have going on, take any item entry, as the one you did a walk through in your previous post on how to enter. In ALL inventory item entries that have been entered since this business opened 2 years ago, the COGS account is "Purchase-Cost of Goods Sold" and the Income account is "Purchase-Cost of goods sold". (first attachment) In my accounting mind there is no way this is correct. The end of the year adjustments are mind boggling. This is going in and out of the same account? Shouldn't the income account be specific? I know this is incorrect, but explaining and finding the fix as in what income account to post to is my issue. I am proficient in accounting but I have no experience in inventory management or item entry. We are a manufacturing facility, jobs (units we are manufacturing) are numbered, an item is then created with that job number. All inventory and non inventory items are listed "within" the job, however, this main "job item" is what is entered and billed on the customer invoice. (second attachment) The inventory and non inventory items are not listed separately on the customer invoice, only the main job. In this job number item entry, the COGS account and Income account are correct. But in the actual inventory items they are not. I AM SO CONFUSED!!!! I have never dealt with a system that did not put items to inventory and then bill those items out on the invoice to the customer which then relieved inventory. That is not the case here and maybe why she was originally taught to do the entries this way??
Thanks for the screenshots, Kevans27.
You're correct. Use the Income Account field to select which account you want to use to track income when items are sold. Otherwise, both purchases and sales amount will be posted in the COGS account. This is the reason why the amount in the COGS account is greater than what it should be.
You can change the selected account from Purchase-Cost of Goods Sold to an income account. Before making any changes, it's recommended to create a back up copy. This is to make sure that you can restore or undo the any modifications made to your settings.
Follow the steps in this article on how to save a backup file: Back up your QuickBooks Desktop company file.
Once done, proceed to changing the account by following these steps:
Once done, run your COGS report to check if the amounts are already correct. Let me also share these articles that can serve as additional guides when tracking inventory in QuickBooks:
Please add another reply below if you need anything else. As always, the QuickBooks Team is here to help you again.