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Level 3

How do I adjust inventory for damaged items so that it affects Cost of Goods but also shows up in profit & loss report Using Quickbooks Desktop?

I have to damage some items out of my inventory in Quickbooks Desktop and when I do I need them to make my Cost of Goods go up.  For example, I understand that a damaged item is cost of goods and I want it to reflect that properly in reports.  However, I don't know how to do this when I do an Inventory Adjustment.  In Inventory Adjustement if I use an Expense Account as my adjusting account as it suggests how will that affect Cost of Goods and make it go up? 

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Best answer October 28, 2020

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Level 7

How do I adjust inventory for damaged items so that it affects Cost of Goods but also shows up in profit & loss report Using Quickbooks Desktop?

When adjusting inventory for damages, you are crediting (reducing) your inventory asset and increasing (debiting) either an expense account for a COGS account.  If COGS, this account will increase by the inventory adjustment.  If you want to track damage costs separately, I suggest you set up a separate account for damaged inventory.  This could be another COGS account or an expense account. 

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QuickBooks Team

How do I adjust inventory for damaged items so that it affects Cost of Goods but also shows up in profit & loss report Using Quickbooks Desktop?

Hello there, @kmasta.

 

If you occasionally write off small amounts of damaged inventory, you do not have to make a separate disclosure on the income statement. The loss is included with the cost of goods sold amount. A separate account such as loss from the write-off of Inventory is included with the other inventory accounts.

 

We can do an inventory adjustment to lower the number of items. Here's how:

  1. Go to the Lists menu and select the Item List.
  2. On the Activities tab, click the drop-down arrow and select Adjust Quantity/Value on Hand.
  3. Select the Adjustment Account by clicking the drop-down arrow. Please consult your accountant to ensure the account recorded is the right account for your business.
  4. Select the item used and record the New Quantity and Qty Difference.
  5. Once done, click Save & Close.

I've also added this link about inventory assets and the cost of goods sold tracking in QuickBooks Desktop (QBDT): Understand inventory assets and cost of goods sold tracking.

 

Let me know how it goes by dropping a comment below. I'm always here to help. Take care!

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Level 3

How do I adjust inventory for damaged items so that it affects Cost of Goods but also shows up in profit & loss report Using Quickbooks Desktop?

Hi thank you for your response but it didn't answer my question.

I want to clarify hopefully you can edit your response or someone else can see I still  need help.

 

Firstly, I am not adjusting inventory for personal use I'm adjusting for damages. 

Second, I was asking what account to use and why and your answer says to ask an accountant.  I don't have one because my business is too small.

 

Also, I am trying to find out how to reduce Cost of Goods Sold when I adjust my inventory for damages in QBD. 

Highlighted
Level 7

How do I adjust inventory for damaged items so that it affects Cost of Goods but also shows up in profit & loss report Using Quickbooks Desktop?

When adjusting inventory for damages, you are crediting (reducing) your inventory asset and increasing (debiting) either an expense account for a COGS account.  If COGS, this account will increase by the inventory adjustment.  If you want to track damage costs separately, I suggest you set up a separate account for damaged inventory.  This could be another COGS account or an expense account. 

View solution in original post

Highlighted
Level 3

How do I adjust inventory for damaged items so that it affects Cost of Goods but also shows up in profit & loss report Using Quickbooks Desktop?

Thank you I appreciate it.

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