Fixing Incorrect Inventory Numbers in QB Online

jenuneekor · ‎June 15, 2020

Good morning! I'm hoping you can help me with an inventory issue.

When we first set up QBO, we were not intending to use it as our primary accounting system. Thus, when I set up products, I put in nonsense inventory numbers. Fast forward to a year later, when our company has determined this will be our primary accounting system :)

The current inventory numbers for all products in QBO are incorrect. I now have our exact 5/31 inventory numbers in excel and can do an inventory quantity adjustment in QBO. But, when I do, it creates a huge inventory shrinkage. Is there a method to either eliminate that inventory shrinkage, or somehow do this inventory adjustment without creating the inventory shrinkage? We don't really need the historical stuff to be correct, just want it to be correct going forward and not reflect that huge inventory shrinkage.

Even if there's a work around or anything like that, it would be fantastic. Thanks in advance for any help you can provide!

Candice C · ‎June 15, 2020

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!

jenuneekor · ‎June 15, 2020

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.

IamjuViel · ‎June 15, 2020

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.

Go to the + New.
Under Other, select Inventory Qty Adjustment.
Enter the Adjustment Date.
In the Inventory adjustment account drop-down, select the appropriate account.
Select the products in the Product field drop-down.
For each item, enter either a new quantity or a change in quantity.
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.

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Fixing Incorrect Inventory Numbers in QB Online