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Rick7
Level 3

Correct Inventory Mistakes

Hi All,

I have been using QB for several years but in a service business.  I recently changed my business focus to manufacturing where I must set up inventory.

I did ok to set up the accounts, but made serious mistakes when I set the adjustment account to another inventory account. After I re-read the manual, I found that I needed to post the adjustments to a COGS account or an expense account. I have only 12 inventory items in 2019. I went back to each prior adjustment and re-did the adjustment to balance the change in quantity and value to an expense account. So far, all good.  I decided to zero out all but two of the inventory items for 2019 just to simplify year end. So, ten of the items show zero quantity and zero value. The two inventory items kept have a correct total quantity and value. The balance sheet is good with only the two items in inventory with a total value of $17,101.67.  The expense account used for the adjustment does not show on the balance sheet. BUT, it does show on the P&L as it represents a loss to operations. The amount of the account is ($17,101.67). How do I make this account zero as it actually represents my multiple attempts and mistakes in posting the right way. In simple terms, my inventory should be $17,101.67, and there should not be a negative expense account item in the P&L.  Please help as I am baffled! Thanks in advance. Rick

3 Comments 3
Catherine_B
QuickBooks Team

Correct Inventory Mistakes

Hello there, Rick.

 

Inventory tracking have specific reporting accounts in our Balance Sheet and Profit & Loss reports. The expense account used for the adjustments are shown in the Profit and Loss report. While only the inventory asset account is reported in the Balance Sheet.

 

We don’t recommend deleting adjustments and incorrectly entered entries since it needs to be shown in the reports. Unless, we’ll entirely remove them and start adding them correctly.

 

I suggest reaching out to your accountant on how to record your adjustments for us to ensure that we’ll not to mess up your books. We can look into this article on how the inventory adjustment works.

 

You can always reach out to me if you need anything else. Thanks!

Rick7
Level 3

Correct Inventory Mistakes

Hi Catherine_B,

Thanks for the quick response!

Unfortunately, I am the accountant, and CEO, and book keeper, and janitor.

I finally figured out the process to use as you decribe in the linked article. But this was after about twenty adjustments that I made over three days.  Once I made an adjustment, I could not delete it. Then it took several tries to get the account back to zero. I finally set all the adjustments to 12/31/2019 so that the math would take place in 2019. So I have the asset accounts correct, and the adjustment account reflects all the + and - from the repeated attempts. I will do this correctly in the future! But for now, in order to get the 2019 books ready for reports, I need to make the adjustment account go to zero to accurately reflect that the accumulated amount is there solely due to entry errors and not due to inventory loss. I would have deleted all the adjustments first if I could have done so. Thanks. Rick

Rick7
Level 3

Correct Inventory Mistakes

Hi Catherine_B,

I figured it out. Thanks for the help.

I was using the inventory adjustment process to actually add the data on the initial inventory. This is what caused all the problems. I now understand that inventory can only be added through a purchase order, and that inventory can only be subtracted through sales, COGS, or loss (shrinkage, etc accounted for as a loss in an expense account). So, I have zero'd all adjustments other than sales and COGS, and the reports all balance. Now I will go back through the process to add inventory the right way. Again, thanks! Rick

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