Does anyone know how to record items that are damaged/waste inventory without tracking inventory in QB?

Thanks for visiting the Community, jmcrider11.

We’ll have to create a zero sales receipt for the damaged items. This way, they’ll show in your records and reports.  I’ll be your guide today on how to do this in QBO.

1. Tap the New menu in the upper left and choose Sales receipt under Customers.
2. Click the Customer drop-down to add the client’s name.
3. Fill in the field boxes with the correct information.
4. In the Product/Service box enter the damaged items, enter the number of waste products in the QTY column.
5. Make sure to input zero in the Amount field.
6. Click Save and close.
7. Perform the same process for the other products you wish to track.

I’m also adding an article that contains topics and resources to help easily handle your inventory tasks in QBO.  Click on the guide to view the full information: Manage your inventory, products, and services in QuickBooks.

Please let me know if I can be of further assistance. I’ll get back to help and make sure you’re taken care of. Enjoy the rest of the day.

I need to record the dollar loss not the inventory quantity loss. If I enter as a zero in the amount field doesn't that defeat the purpose?

Hi @jmcrider11,

Thank you for your prompt reply. 

I suggest you create an expense account to track the amount you lose for a waste inventory item. What you need to do next is to add a service to the Products and Services page. 

Follow these steps to create the expense account:

1. Click the Accounting tab.
2. Select New.
3. Set the Account Type to Expenses, then choose whichever is closest to the Detail Type.
4. Enter a name.
5. Hit Save and Close.

Next up, you need to create a service to link this expense account. Here's how:

1. Highlight the Sales tab.
2. Select Products and Services.
3. Press New.
4. Select Service.
5. Enter a name.
6. Change the Income account to the expense account you created above.
7. Click Save and close.

At this point. you can create a sales receipt with the service you recently created. Under the Amount column, type in the total amount for the damaged inventory items in question. This will count as a loss for your business.

I suggest you view this article: Can I track inventory manually in QuickBooks Online? Here you can follow the steps to track inventory items in your QBO company, even without the inventory feature enabled. 

Need further assistance with this process in QuickBooks Online (QBO)? Post a reply, and I'll be sure to get back to you. 

@jmcrider11 

You may need an additional app to do so. For any output of a process, you can specify the output item as waste. Based on the percentage of waste items and non-waste items, the app will calculate a yield for your process. This helps you to evaluate materials from different suppliers, for example, to determine which gives you the best outputs in your manufacturing. Waste items go into inventory like any other inventory item, so that they can be tracked and used later as needed.

Hello, I need to do this exact thing. Record the dollar loss not Qty, were you able to find a solution? 

Thanks for reaching out to us.

I can share some tips on how you can record them.

You can set up an expense account to track the amount of the damaged inventory items. Then, link them to a service item. Feel free to follow the steps provided by my colleague, 

Ryan_M to be guided in performing the process.

Once done, you'll have to create a sales receipt with the service you've just created. Make sure to add enter the correct amount of the damaged inventory item. This way, QuickBooks will recognize the amount as a loss for your business.

I'm also adding this article to learn how to see your best sellers, what’s on hand, the cost of goods: Use reports to see your sales and inventory status.

Keep me posted if you have any other concerns or additional questions about inventories. Have a good one.

@HOW TO SYNC ANOTHER LOCATION 

Contact us in private and we may recommend you an app to explore and integrate it with QBO.

Hi, my question is similar to jmcrider11, i followed the procedure given by Ryan_M

My follow up question is when I click "Receive payment", what account shall I choose under "Deposit To"?

It is damage during production and it is not chargeable to the customer.

Thanks for joining this thread, @rose16. 

When you click the Received payment option, from the Deposit to dropdown, choose the account you put the payment into. You can place the money directly into an account, like your checking account, or select Undeposited Funds if you need to group the payment with others. 

Additionally, let me share this link to help track what's on hand, get alerts when it’s time to restock and see insights on what you buy and sell. You can also enter non-inventory products and services to add them to your sales forms: Set up and track your inventory in QuickBooks Online.

If you need further assistance with recording the dollar loss, I'll be around to help you always. Stay safe!

Set up an inventory write-off expense account  to record the value of the damaged inventory > Entry  

Cost of Goods sold  Debit ...................................xxxxxx

 Inventory write off expenses  Credit .........................................xxxxx

I have the exact same situation.  I followed thru the Sales Receipt step and there is now a large dollar amount in my 'undeposited funds' account.  WHAT ACCOUNT do I 'deposit' this to? It cannot go to the bank account and is damaged/scrap items.  If I 'deposit' to the bank account or accounts recievable it will artifically INCREASE our taxable income. WHERE do I 'deposit' it to? 

Thanks for joining this thread, @Dsimm54057. Let me chime in and provide further info on where to deposit the amount.

As mentioned above, under the Deposit to dropdown, you'll have to choose the account where you want to put your money. 

Since your taxable income increased after choosing your bank account or accounts receivable, I recommend reaching out to our accountant. They can provide additional advice on what account to use in the Deposit to section and help properly manage your inventory and tax records in QuickBooks. This way, we can make sure your books are accurate when you close them.

Additionally, I've attached some articles you can utilize manage your inventory in QuickBooks:

• Track inventory manually in QuickBooks Online
• Use reports to see your sales and inventory status

Feel free to comment below if you have further questions about the account to use in the Deposit to dropdown. I'll be happy to help you further. Keep safe!

Your response really does not help. You suggested/ advised using a sales reciept which did work for the PL and BS reports. However, it also leaves the $ amount in undeposited funds.  If you cannot advise where to 'deposit' this amount (which is showing positive not negative ) then please do not advise to use this method to reconcile damage goods that are NOT tracked by inventory. The reports you list below do not help as that is not the issue.  I will reverse the transaction and do a journal entry instead. 

Has anyone tried the journal entry method? Does it reduce the correcrt accounts? 

There is no money to deposit.  I simply need to record the loss and make sure it lowers COGS account.  The Sales reciept way does not do this

Use the journal entry method posted earlier here - the sales receipt method is a unnecessary work around - 

Set up an inventory write-off expense account  to record the value of the damaged inventory > Entry  

Cost of Goods sold  Debit ...................................xxxxxx

 Inventory write off expenses  Credit .........................................xxxxx

I use this for many clients who have damaged goods and livestock.  You can manually change the inventory items to update your current inventory