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How do I write down inventory?

What is best way to write down inventory cost?   In discussions with my accountant, I was told to create journal entries to the inventory asset accounts which I did.   This has created a negative inventory asset.  Everything I am reading online suggests that entering journal entries to inventory is a big NO-NO!    If I delete the journal entries, what is best way to write the inventory cost down?   We are doing this for year end adjustments to inventory cost.   We may be selling these items in the future, so I assume that profit would be 100%.   Any help you can give me would be appreciated.

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Best answer 12-10-2018

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No, never ever use a journal entry for inventory asset....

No, never ever use a journal entry for inventory asset.  Inventory asset is a summing account, nothing ever posts to it

You need an accountant familiar with QB and perpetual inventory

Inventory is written down when goods are lost, damaged - not salable, spoiled/expired, or stolen, and in QB you do that with an inventory adjustment.  Create if you so not have it, a sub account of COGS called loss/theft/spoilage and use that account when you do an inventory adjustment.  Lower the qty of items that need to be written off.


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Established Community Backer ***

No, never ever use a journal entry for inventory asset....

No, never ever use a journal entry for inventory asset.  Inventory asset is a summing account, nothing ever posts to it

You need an accountant familiar with QB and perpetual inventory

Inventory is written down when goods are lost, damaged - not salable, spoiled/expired, or stolen, and in QB you do that with an inventory adjustment.  Create if you so not have it, a sub account of COGS called loss/theft/spoilage and use that account when you do an inventory adjustment.  Lower the qty of items that need to be written off.


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I'm using your suggestion but when I choose my COGS:Obsol...

I'm using your suggestion but when I choose my COGS:Obsolete sub-account I receive an error message that says that Inventory is usually adjusted to an expense or income account and not a COGS account. Am I understanding your suggestion wrong or ?
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"I receive an error message that says that Inventory is u...

"I receive an error message that says that Inventory is usually adjusted to an expense or income account"

That's a Warning message; not an Error message.
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Yes, you are correct. I should have used the term Warning...

Yes, you are correct. I should have used the term Warning instead of Error. Thank you for pointing that out. Do you have an answer to my question though?
Established Community Backer ***

You Keep Going. Yellow Warning = the human needs to evalu...

You Keep Going. Yellow Warning = the human needs to evaluate if they really intend to take this action. Red X = the human is not Permitted to take this action.
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@ chippie the COGS sub account is the correct way to do i...

@ chippie
the COGS sub account is the correct way to do it.  Double check your chart of accounts, if the the obsolete name account is shown as a sub account of COGS, then you are good to go.  If it is not shown that way, either you did not make it a sub account or you used the wrong type of account when you set it up - if so correct the account type to COGS
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The reason you don't use JE for this, is that you orphane...

The reason you don't use JE for this, is that you orphaned the Items by Name from their Value in that account.

Adjusting inventory is done Per item Name, specifically, for that item.

Why are you reducing Cost? Cost is your basis, or what you paid. You don't change that, later.

"We are doing this for year end adjustments to inventory cost.   We may be selling these items in the future, so I assume that profit would be 100%"

If they are telling you to Write Off the cost as expense, already, then ask them why are you having to manage it as Inventory, then? You don't need to use Inventory Management in QB, to track "stuff."


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We are a starter on QB.  Please help. We are writing off...

We are a starter on QB.  Please help. We are writing off expired inventories and we have been just creating an invoice to pull the item# Qty off the list (shelf) but would like to confirm if that is the correct way to do.  In addition, where do we go to adjust the value amount of the expired item?
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Vendor menu > Inventory Activities, Adjust Inventory. Vie...

Vendor menu > Inventory Activities, Adjust Inventory. View Qty and Value. Assign the date and the offset account. Pull in the Items you want to dispose of. Enter what you need, to take this to proper physical count of each item for its status, such as Waste = 0 left on hand for qty and cost.
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Re: Vendor menu > Inventory Activities, Adjust Inventory. Vie...

is there anyway to write down specific inventory and assign that loss to a specific sales rep ID?  For example, if we have a customer return and the goods are damaged or undesirable, we'd like to debit the sales rep's gross profit number.

QuickBooks Team

Re: Vendor menu > Inventory Activities, Adjust Inventory. Vie...

Hello, ryanavarisource.

 

You can debit your rep’s gross by recording a credit memo and issuing a refund check in QuickBooks.  For the detailed steps on how to create a credit memo and issue a refund check, please refer to this article: https://quickbooks.intuit.com/community/Reports-and-accounting/Record-a-credit-memo-or-refund-in-Qui....

 

Please visit us again if there’s anything else we can help you about QuickBooks.

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Re: Vendor menu > Inventory Activities, Adjust Inventory. Vie...

The trick here is Not to use the original inventory item on the Credit memo: "For example, if we have a customer return and the goods are damaged or undesirable, we'd like to debit the sales rep's gross profit number."

 

You want to list a Value for the activity, as a Noninventory or Other Charge Type of item, such as "RMA only" and not have this returned to stock first, to be adjusted afterwards. You want the credit memo to show the Rep, because a credit memo is the reversal of the sale. Then, you have the time to declare if the item goes back into stock, needs to be repaired first, or is being disposed of. And think of the inventory sale item that never arrived or was so damaged, no one should spend money returning it to you at all. That's why you only list the Inventory Item on the Credit memo when you actually got it back and Into the warehouse on hand ready to sell, again.

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