Question

Inventory continues to increase despite sales

Forum|Forum|2 years ago
September 21, 2023
6 replies
37 views

I just opened a pharmacy less than a year ago. I’ve been entering all retail and medication purchases (both items sold directly such as OTCs and prescription drugs as well as all medications and supplies used to make custom medications) all under “inventory assist” category. As can be expected this number continues to rise but doesn’t go down based on sales made and entered under “sales”.
This has caused the valuation of inventory to be extremely inflated and out of line with our true inventory value. How do I fix this, or automate inventory assists to decrease when a sale is made?

Thank you for the help!

QuickBooks Online

Angelyn_T

Moderator

It's my priority to assist you with your inventory data, Port.

To help you better, could you provide more details about your product setup? Are they listed as inventory items, and are you using QuickBooks Online (QBO) Plus or Advanced for inventory tracking? How did you assign Inventory Assist to them? Adding a screenshot could also help me verify this further.

Your reply is much appreciated. I'm just a few clicks away to help you again. Have a good one!

P

PortfamilyrxAuthor

Debits from my various wholesaler purchases are categorized under “inventory assets”

I do not use any of those products at the moment. True inventory is monitored by my pharmacy software

Bryan_M

QuickBooks Team

Thank you for the prompt reply, @Portfamilyrx. We understand how challenging it is on your end that your inventory continues to increase despite having sales. Let me help you clear things up.

Once you set up all your inventory products, there are two ways to track what you sell. First, create an invoice if you'll get paid later and add a sales receipt if your customer pays on the spot.

Additionally, QuickBooks then decreases what's on hand by the amount on the invoice or sales receipt using the inventory item to track that there's a decrease. For more details, read this article: Set up and track your inventory in QuickBooks Online.

Moreover, we'd like to clarify if you use inventory, and manually track it. If so, we'll perform a Journal Entry (JE) to track your sale. Here's how:

Select + New.
Choose the Journal entry.
On one line, enter a Debit to your cost of goods sold account for the original cost of the product you sold. Do not use the sales price.
On the next line, enter a Credit for the inventory asset account for the original cost of the product you sold.
Click Save.

Check out this article for more details: Track inventory manually in QuickBooks Online.

For future reference on managing your inventory, you can read these articles:

For additional questions, never hesitate to come back here. I'll be willing to lend a hand. Have a good day.

Rainflurry

Level 11

@Portfamilyrx

If you aren't using QB to track inventory, but are using it to record the purchase of inventory using bills, then you will need to manually decrease your inventory and increase your COGS with a journal entry. Your P&L and balance sheet will only be accurate as of the date you make the journal entry. It's common to make the journal entry on the last day of the month. To do that, run a report from your pharmacy software to get your on-hand inventory at each month's end. Take that number and subtract it from the inventory value in QB. Then make a journal entry - debit COGS credit inventory for that amount.

Here's an example: On Aug. 31, your pharmacy software shows you have $100K in inventory and QB shows you have $140K in inventory. Create a journal entry that debits COGS for $40K and credits inventory for $40K. Since you have been open less than a year, it should be easy enough to make an entry for each month. If you were open in 2022 and filed a tax return, you will want to make sure that your 12-31-22 entry matches what was filed on your tax return.

Let me know if you have any additional questions.

P

PortfamilyrxAuthor

Thank you! I will try this tomorrow!

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