How can I adjust inventory without changing COGS?

mccoy · ‎December 06, 2018

We have 2 versions of several products.

Version A and Version B

All the BILLS for inventory were created as Version A. We did not create inventory for version B. We sold many version B units and now have negative inventory for Version B and too much inventory for Version A.

If I adjust inventory the cost of goods changes and profit goes out of whack.

Is there a way to adjust inventory without affecting cost of goods?

Anonymous · ‎December 06, 2018

Glad to see you here, Mccoy,

I can share some information about adjusting your inventory.

At this time, there isn't an option to adjust the inventory without affecting the COGS account in QuickBooks Online. This is because inventory is the main component for calculating the Cost of Goods Sold that's reported in the income statement.

Any changes made to the inventory will always affect your company's Current Assets in the Balance Sheet and the COGS accounts. In your case, it would be best to check with an accounting professional to get help adjusting your inventory without affecting the COGS. They can provide you with the best legal and accounting advice on what you can do to get past this hurdle.

Please update me on how this goes, Mccoy. I'm your personal QuickBooks guide. Have a good one!

Rustler · ‎December 07, 2018

@mccoy

QB does not allow for the transfer of item qty and cost from one item another at all in QBO, and it makes it difficult to do so in desktop.

in QBO you have to use a work around

create a cash type bank account called clearing
use inventory adjust, set the adjusting account to the clearing bank account, then lower the qty of item A
use any vendor, or create one called inhouse, and "BUY' the item B in the same qty, the total amount is the balance in the clearing bank account

jbuzaglu · ‎October 22, 2019

Hi @Rustler

I am having trouble with this. I understand what you did with the clearing account. However when you "BUY" or create an expense of the same product, it will obviously change your costs.

Am I missing something?

Thanks

Rustler · ‎October 23, 2019

@jbuzaglu wrote:

Hi @Rustler

I am having trouble with this. I understand what you did with the clearing account. However when you "BUY" or create an expense of the same product, it will obviously change your costs.

Am I missing something?

Thanks

What this does is move the value of the item(s) to the clearing account

at that point the total value of inventory asset is lowered

then you "buy" inventory using that value and inventory asset increases

so the cost is transferred to the new item

jbuzaglu1 · ‎October 23, 2019

Ok, so basically for inventory depletion you transfer Inventory to Clearing Account, and for Inventory Purchases, you make a regular expense?

What happens to that clearing account, it will grow infinitely, will that increase affect your expenses or sales in any way?

Thanks @Rustler

Rustler · ‎October 23, 2019

@jbuzaglu1 wrote:

Ok, so basically for inventory depletion you transfer Inventory to Clearing Account, and for Inventory Purchases, you make a regular expense?

What happens to that clearing account, it will grow infinitely, will that increase affect your expenses or sales in any way?

Thanks @Rustler

You buy the item FROM the clearing account, so each process zeros out

value goes in the clearing account, same value out to buy the new item

ChalosCoffee · ‎June 21, 2022

Thank you so much! This helped me in my business as well!

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How can I adjust inventory without changing COGS?