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HitchCovers76
Level 1

How to convert Inventory to COGS without having QuickBooks inventory tracker?

The main goal is to implement both Inventory and COGS on my financial reports. I'm new to QB and just uploaded and categorized all of my 2019 transactions. We manufacture and sell products.

I originally set each part and/or material as "COGS". However, after further reading it sounds like I should set those purchases as Inventory first, which i just finished doing.

In 2019 I used excel to track inventory and expenses so I know exactly how much inventory I have at year end as well as exactly how much the materials cost for each sale.

Is it possible to take the total Cost of Materials from each sale, aka my excel COGS and implement it into QB while subtracting that amount from QB inventory?

For example, in QB right now, all parts and materials are categorized as Inventory. That equals $14000.

The cost of goods sold from my excel equals $5000.

Can I add a transaction or something to QB and subtract $5000 from the $14000 in inventory so that the financial statements show at 2019 year end that $9000 is inventory and $5000 is COGS?

Thanks
2 Comments 2
Angelyn_T
Moderator

How to convert Inventory to COGS without having QuickBooks inventory tracker?

Glad to have you here on the Community page, @HitchCovers76.

 

I discovered a post with a similar problem that I already answered. You can open this link for the answer: https://quickbooks.intuit.com/learn-support/en-us/reports-and-accounting/re-cogs-split-for-inventory....

 

I also encourage checking with a professional accountant to help review and account your transactions accordingly to meet the amounts needed per account.

 

As always, read our QBO help articles in case you need tips and related links in the future.

 

Post again if there's anything you need assistance with. I'm a few clicks away to help. Wishing you a good one!

Rustler
Level 15

How to convert Inventory to COGS without having QuickBooks inventory tracker?

@HitchCovers76 

 

Yes, you are asking about periodic inventory.

 

There are two ways to do periodic inventory, choose one and stick with it, you can not mix and match

 

1. (my preference) Create an asset account called purchases and post all purchases of item for resale to that account. Periodically, weekly, monthly, etc value the inventory on hand, subtract that value from the amount shown in the purchases account and do a journal entry for the answer to the subtraction
debit COGS for that value
credit purchases for that value

 

OR

 

2. Post all purchases to COGS. Periodically, but at least at the end of the year, you value the inventory on hand and do a journal entry.
debit the asset purchases account for that value
credit COGS for that value

Print the P&L
then reverse the journal entry
debit COGS for that same value
credit the asset purchases account for that value

 

This last journal entry, moves the value of what was on hand at the end of year back to COGS so the cost will be counted against the new year sales.

 

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