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Level 1

How do I track damaged inventory loss or company use items?

 
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Best answer December 10, 2018

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Anonymous
Not applicable

How do I track damaged inventory loss or company use items?

Self-used inventory can be entered as an 'internal bill' - create a vendor for "yourco (internal)"

Create a bill from this vendor.

Enter a (negative) amount of items taken from stock, use the current average cost as the price

then enter and categorize an expense using the same value as above - with no sales taxes.

The total for an internal bill must always be zero - you cannot owe yourself money.


If by damages stock you mean that you want it removed from inventory:

Same process as above except categorize the expense as damage.


Both these can be also be done via "inventory adjustments" - but I find the internal bills easier to understand and much more flexible to enter and edit.


View solution in original post

8 Comments 8
Highlighted
Anonymous
Not applicable

How do I track damaged inventory loss or company use items?

Self-used inventory can be entered as an 'internal bill' - create a vendor for "yourco (internal)"

Create a bill from this vendor.

Enter a (negative) amount of items taken from stock, use the current average cost as the price

then enter and categorize an expense using the same value as above - with no sales taxes.

The total for an internal bill must always be zero - you cannot owe yourself money.


If by damages stock you mean that you want it removed from inventory:

Same process as above except categorize the expense as damage.


Both these can be also be done via "inventory adjustments" - but I find the internal bills easier to understand and much more flexible to enter and edit.


View solution in original post

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Level 1

How do I track damaged inventory loss or company use items?

I'll try that!  Thanks so much!
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Level 1

How do I track damaged inventory loss or company use items?

This makes sense to me but I don't understand how sales and use tax is handled.  How do you handle the sales and use tax that would be due on an item that you use internally?  I thought the company would owe sales & use tax based on the company's cost for that item.  

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Anonymous
Not applicable

How do I track damaged inventory loss or company use items?

Hi there, @elsalty.

 

I can help share some information about recording an item that you use internally.

 

If the items were used personally, then you should not be selling this product to yourself. This item will be considered as an expense and should be non-taxable. However, it would still depend if your state requires you to do so.

 

In your case, you can do an inventory adjustment to lower the quantity of items taken for personal use. 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.

 

 

 

That should do it. Let me know if you have other questions about self-used inventory. I'm here to help however I can.

 

 

 

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Level 1

How do I track damaged inventory loss or company use items?

OK sorry to say that I'm still confused. We shipped an order to a customer a few months ago and sent them an invoice. Since then, sales tax has been paid for that invoice. We have never received any payment from the customer and the entire shipment was lost in transit.

 

In Quickbooks Online, I need to bring the customer's owed balance to zero, somehow get the sales tax credited in a later period and write-off the inventory as damaged. If I simply do an inventory adjustment, it will appear as inventory shrinkage which doesn't seem right.

 

Can anyone give me step by step instructions to achieve all the things that need to be achieved?

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QuickBooks Team

How do I track damaged inventory loss or company use items?

Glad to have you back, @briton.

 

I've got you covered in recording the lost item that was sent to your customer in QuickBooks Online.

 

If an invoice is no longer collectible, you need to record it as a bad debt and write it off. This is to ensure your accounts receivable and net income are correct.

 

Before doing so, you'll need to review other invoices or receivables that should be considered as bad debt using the Accounts Receivable Ageing Detail report.

 

Once verified, let's now create a bad debt expense account.

 

Here's how:

  1. Select the Gear ⚙ icon.
  2. Under Your Company, select Chart of Accounts.
  3. At the upper right, select New.
  4. From the Account Type ▼ drop-down.
  5. Select Expenses.
  6. From the Detail Type ▼ drop-down, select Bad debts.
  7. In the Name field, enter “Bad debts.”
  8. Select Save and Close.

After that, we'll need to create a bad debt item and credit note, then apply it to the invoice. To give you the complete details of this process, please refer to these articles: 

In case the item will be returned, you can just make an inventory adjustment. To do that, you may check out this link: How to adjust inventory quantity on hand.

 

These resources should help you record your transactions correctly, briton.

 

I want to ensure that this gets taken care of for you, so please feel free to update me by posting a comment below. Have a wonderful week ahead!

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Level 1

How do I track damaged inventory loss or company use items?

I am a self owned company that does staging for real estate sales. I recently lost all of the furniture I used for staging in a warehouse fire. How do I properly record this loss in Quickbooks Online? Please understand that I'm still learning how to use Quickbooks so explain in a way that a rookie can understand. Thank you.

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QuickBooks Team

How do I track damaged inventory loss or company use items?

You've come to the right place, @Thibcli.

 

There are two ways on how to record the loss of your furniture in QuickBooks Online. I'd be delighted to walk you through the process.

 

The first process is to write off the bad debt, this refers to accounts receivables that will not be collected in QuickBooks.

 

To start, let's create a bad debts expense account:

 

  1. From the Accounting menu, select Chart of Accounts.
  2. Click the New button.
  3. From the Account Type drop-down menu, select Expense or Other Expense.
  4. From the Detail Type drop-down menu, select Bad Debts.
  5. Enter Bad Debts in the Name field.
  6. Select Save and close.

 

Then create a bad debt item:

 

  1. Go to the Gear ⚙ in the upper right corner.
  2. Under Lists select Products and services.
  3. Click New, and then Non-inventory.
  4. In the Name field, enter “Bad debts.”
  5. From the Income account ▼ drop-down, select Bad debts.
  6. Select Save and Close.

 

Once done, you can proceed to Step 4 and Step 5 in this article: Write off bad debt in QuickBooks Online.

 

The second process is to use the Adjust Inventory option in QBO to update the number of your stocks. 

 

  1. Click the + New button.
  2. Under Other, press Inventory Qty Adjustment.
  3. Enter the Adjustment Date and complete the details of the transaction.
  4. Hit Save or Save and Close.

 

Here's a great resource to guide you with the adjustment on inventory tracking: Adjust inventory quantity on hand in QuickBooks Online.

 

I'll be more than happy to share additional insights and assistance with QuickBooks whenever you need it. Have a good one!

 

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