If I forgot to enter an inventory adjustment for end of '20, what should I do now?
Hi there, @stevepettit72. I'll share some information about your query.
Since you've already filed your 2020 IRS tax form, I suggest avoiding any inventory adjustments. It can mess up older records that are reconciled.
If you haven't yet reconciled your 2020 records, you can still enter an inventory adjustment. But just in case you've already closed your books, what you can do is to create a journal entry and then make sure to consult this with your accountant to ensure the previous year and current year's books are accurate.
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It will affect 2020 and 2021 because EOY20 inventory is also BOY21 inventory. The bigger question is how does this change affect cost of goods sold (COGS). Is COGS over/short by the same amount between your tax return and QB?
If you're just changing your EOY inventory amount (and all other variables like purchases stay the same), you will need a corresponding entry to COGS. If you increase your inventory, you will decrease your COGS, thereby increasing your net income. If you need to decrease inventory, you will increase COGS, thereby reducing net income. If you can provide more info, I will try and help further.