Fixing Incorrect Inventory Numbers in QB Online

Good Morning, @jenuneekor. 

It's great to see you back in the Community. Creating an Inventory Quantity Adjustment is the most efficient way to ensure that your inventory numbers are correct. However, the shrinkage will show unless you create the inventory items again with the right quantity.

Before doing so, I recommend consulting with your accountant. They'll be able to give you the best accounting advice for your business. If you don't have an accountant, check out this link to find one near you. 

If you have any other questions, don't hesitate to ask. I'm always here to lend a helping hand. Have a splendid day!

Thank you Candice! I was hoping if I adjusted the inventory, and then balanced the inventory shrinkage with a journal entry into my inventory assets, they would balance each other out to zero? But it sounds like maybe it doesn't work that way? Unfortunately our accountant does not have advice on how to handle this in QBO. He knows what to do in QB desktop but it's not the same process in QBO I guess?

Thanks again for your thoughts.

Hello, @jenuneekor.

When you create an inventory adjustment, QuickBooks automatically records appropriate adjustments to your stock Asset and Cost of Goods Sold (under stock Shrinkage) accounts.

1. Go to the + New.
2. Under Other, select Inventory Qty Adjustment.
3. Enter the Adjustment Date.
4. In the Inventory adjustment account drop-down, select the appropriate account.
5. Select the products in the Product field drop-down.
6. For each item, enter either a new quantity or a change in quantity.
7. Select Save and close.

You can refer to this article for more insights: Adjust inventory quantity on hand in QuickBooks Online.

Let me know if you have other questions. I'm always here to help.

If you don’t need the historical data to be correct and your goal is to ensure accurate inventory levels going forward without a large shrinkage expense, adjusting historical documents might seem like a solution. However, it’s important to understand the potential impacts on your financial records.

Steps to Solve:

1. Adjust Historical Documents (with caution):

   • You can reduce quantities in historical receiving documents for each product with shrinkage. This approach can help avoid a large inventory shrinkage expense but can alter historical financial data.

2. Document Changes:

   • Keep a detailed record of all changes made to historical documents. This documentation is crucial for audit trails and future reference.

3. Set a Starting Point:

   • After making the necessary adjustments, choose a specific date as your starting point for accurate inventory levels. Ensure that all future inventory tracking is precise from this point onward.

4. Consult with an Accountant:

   • It’s always advisable to consult with your accountant before making such changes to ensure compliance with accounting principles and to understand the full implications.

Additional Advice: For ongoing accurate inventory management, consider using a third-party app like Warehouse 15, which offers advanced tracking and management capabilities.

Why Warehouse 15:

• Advanced Tracking: Manages physical inventory across multiple locations.
• Mobile Support: Allows front-line workers to manage inventory with Android devices.
• Barcode/RFID: Supports barcode/RFID scanning for accurate tracking.

For more details, you can check out the Cleverence Warehouse 15 solution.

Hope this helps!