Correcting the Inventory Value

You can create a Journal Entry to adjust the inventory value, Dawn. I'd be glad to share some insights about this and guide you through the steps.

In QuickBooks Online (QBO), direct adjustments to the inventory value are unavailable since the system operates on a First In, First Out (FIFO) basis, which prioritizes the sale or usage of older inventory items first.

However, you can make adjustments through a Journal Entry (JE). Before following the steps below, I recommend consulting with your accountant when creating a JE to ensure accuracy.

Here's how:

1. Navigate to the + New and choose Journal Entry.
2. For the first line, select an account from the Account field. Depending on whether you need to debit or credit the account, enter the amount in the correct column.
3. On the next line, select the other account you're moving money to or from. Depending on whether you entered a debit or credit on the first line, enter the same amount in the opposite column.
4. Check the amounts - you should have the same amount in the Credit column on one line and the Debit column on the other. This means the accounts are in balance.
5. Enter information in the memo section so you know why you made the journal entry.
6. Finally, click Save and Close to complete the entry.

For more information, refer to this article: Create journal entries in QBO.

In case you want to export your inventory value report or journal entry to use outside of QuickBooks, check this resource: Export your reports to Excel from QBO.

You can tag me in the comment section if you have any other concerns about adjusting the inventory value. I'll be around to further assist you.

But I want to correct the unit cost along with the individual product value. Won't a journal entry just correct the total inventory value and not the individual product?

That's correct, a journal entry will adjust the total inventory value in your accounting records, but not the unit cost or value of individual products in your inventory, Dawn.

As my colleague pointed out, QuickBooks utilizes a FIFO (First In, First Out) method for inventory management. Given your specific inquiry about correcting unit cost or value of individual products, I strongly recommend consulting with your accountant. They can provide tailored advice and suggest alternative approaches that align better with your particular business needs, ensuring precise adjustments in your inventory system.

For a comprehensive guide on adjusting inventory quantities in QuickBooks Online, please visit the following link for detailed instructions: Adjust inventory quantity on hand in QuickBooks Online.

Additionally, click on impacts of inventory tracking on the Balance Sheet and Profit & Loss reports in QuickBooks Online to learn how it can affect your financial reports.

Should you encounter any issues or have more queries about managing inventories, please add them in the comments. I’m here to provide further assistance.

I understand the FIFO process but why doesn't removing inventory (taking it to 0) and then changing the unit cost and receiving inventory back in doesn't change the unit cost? If I remove 600 books at $2.49/bk and then change the cost to $5.02 and receive 600 books in the new unit cost should be $5.02. I can't create a new item because all my sales history is tied to this item. We pay royalties on our books some increase by quantity sales

Adding value to the over all inventory is what's being done but I need the unit cost to be correct. Otherwise the inventory value won't balance to the balance sheet.

This is a huge system flaw if you can't correct the unit cost of a product.

Hello Dawn Dockrill,

Thanks for mentioning this! I will take this and submit feedback to our Product Developers about adding a system to correct the unit cost of a product. I encourage you to join me as well and submit feedback. Here's how: 

1. Go to Settings and select Feedback.
2. Enter your comments or product suggestions. Then select Next to submit feedback.

Please let me know if you have any other questions or concerns. My team and I will do our best to assist. See you later. 

@Dawn Dockrill 

I tried creating the situation you describe, but didn't see any issues:

• I bought ten of a new inventory item for $10 per item. -> Inventory account balance $100
• Then I adjusted them away with an inventory adjustment. -> Inventory account balance $0
• Then i bought 5 more, but at $20 per item. -> Inventory account balance $100 again, as expected.
• Then I sold them for $25 each -> cogs for each item as $20, as expected.

RE: If I remove 600 books at $2.49/bk and then change the cost to $5.02 and receive 600 books in the new unit cost should be $5.02.

What do you mean by remove and then receive?  What type of transactions are you entering to record these events?

Note that the cost on the item record is just a default and doesn't change the valuation.

RE: Adding value to the over all inventory is what's being done but I need the unit cost to be correct. 

Your cost per item, and related Cost of Good sold when you sell an item, is based on whatever you paid for the items on hand. If the cost appears wrong, then either the cost on purchase transactions were not entered correctly or the cost is not wrong.  (Unless there is a bug, but that seems unlikely).