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Level 1

How to adjust inventory quantity on hand with a JE?

The inventory was entered as a beginning balance not using the inventory tracking feature in QB Online. But now at the end of the year I need to make an adjustment to the year end numbers. What  account will I be crediting? Cost of Goods Sold?? Inventory Shrinkage??

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Level 15

How to adjust inventory quantity on hand with a JE?

This assumes you still are Never Using the function of Inventory Items, and you are doing "periodic inventory".

 

For Periodic inventory, you are simply rebalancing between Asset and COGS for what still is on hand vs what is now sold.

 

And that Never provides for, or includes, Quantity.

 

On the other hand, if someone put generic Asset value on hand, and now you want to use Inventory Items, by name, etc, you need the Asset Value to be in its own Asset account, such as "Periodic Inventory" or "Other Asset." When you use Adjust Inventory to populate from your physical count, you will see that the program puts this to an Expense adjustment account. Then, you need to reconcile any difference between the generic Other Asset and that Expense Adjustment, closing Other Asset to Adjustment, so that only the one Inventory Asset account is holding the values for what is on hand, and that adjustment expense account is the Net or difference from what you Thought you had, generically, and what you just physically tracked and counted and confirmed with cost basis.

 

And then you never use JE again, because everything for inventory needs to show the Actual Inventory product as part of the work you are doing, from now on.

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