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Inventory transactions show in ledger without a value

I set-up inventory tracking and created "inventory" items in Products and Services.  I put a cost on the inventory but read an earlier thread that the cost comes from the acquisition of inventory.  I have since processed vendor bills with these same items and cost.  When I run an inventory valuation report it shows the values of these items.  When I look at the ledger in Cost of Goods Sold or inventory transactions it shows as zero value.  I have processed transactions after the date of the vendor billing and still no value.  I also tried to change the value of the COGS entry by editing the transaction register but it will not allow me to do that.  Am I missing something in the set-up?   Is there another way to fix the transactions already processed with zero COGS?

Thank you. 

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Best answer 12-19-2018

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Re: Inventory transactions show in ledger without a value


@bglynn58 wrote:

Yes these transactions were generated from the sales transaction (the same is true if I make an inventory quantity adjustment).  We operate on an accrual basis.  The sales booked ok against AR and have subsequently been paid.

 

I have attached a copy of the GL Inventory account.  The bill from the vendor was processed previously and is reflected in the balance at the top.  As you can see from the transactions (I entered an inventory adjustment today to show this) they still do not pick up a value.  If I run the inventory valuation report the values reflect properly in that report.  The purchase date is before the sale date for most transactions, however the purchase (vendor invoice) is in AP but has not been paid (terms are 60 plus days). I have attached the GL for AP showing this.


It does not matter if bills or invoices are paid or not for inventory valuation

 

Some questions that come to mind:

- In the Bill on 9/24 did you use the same item as you used in the invoices?

- When you set up the inventory item did you enter a quantity, but zero cost?

- Did you leave the default linked accounts (for COGS and Inventory) in the inventory item set-up screen?

A screen shot of the Inventory Detail report for this item would be useful

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Re: Inventory transactions show in ledger without a value


@bglynn58 wrote:

When I look at the ledger in Cost of Goods Sold or inventory transactions it shows as zero value.   I have processed transactions after the date of the vendor billing and still no value. 


Are these sales transactions? There is no COGS until there are sales. 

There should be a value in the inventory register. Make sure the linked account is right.

Also make sure the purchase date is before the sale date


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Re: Inventory transactions show in ledger without a value

Yes these transactions were generated from the sales transaction (the same is true if I make an inventory quantity adjustment).  We operate on an accrual basis.  The sales booked ok against AR and have subsequently been paid.

 

I have attached a copy of the GL Inventory account.  The bill from the vendor was processed previously and is reflected in the balance at the top.  As you can see from the transactions (I entered an inventory adjustment today to show this) they still do not pick up a value.  If I run the inventory valuation report the values reflect properly in that report.  The purchase date is before the sale date for most transactions, however the purchase (vendor invoice) is in AP but has not been paid (terms are 60 plus days). I have attached the GL for AP showing this.

Moderator

Re: Inventory transactions show in ledger without a value

Thanks for reaching out to us, bglynn58.

I appreciate the screenshot that you've provided. Allow me to provide a little information concerning inventory in QuickBooks Online.

 

There should be a value or cost when you first set up the inventory item. COGS will be reported from invoice if the reporting method is in Accrual Basis, COGS will be shown zero if the P&S setup has 0 cost.

 

COGS will be reported from Bill/Purchase if reporting method is on Cash Basis. If you wish to show COGS on Accrual, make sure that the initial setup of product COST is entered. If already entered a zero cost. Product must be deleted and recreated

 

You may find this article helpful: How to set up Inventory and tracking.

 

Feel free to get back to me if you have any other concerns about inventory. I'll be here to help you out. Have a nice day.

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Re: Inventory transactions show in ledger without a value


@bglynn58 wrote:

 

 

I have attached a copy of the GL Inventory account.  


The attachment shows the AP account

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Re: Inventory transactions show in ledger without a value


@RoseMarjorieA wrote:

 

 

There should be a value or cost when you first set up the inventory item. COGS will be reported from invoice if the reporting method is in Accrual Basis, COGS will be shown zero if the P&S setup has 0 cost.

 

 


The statement "There should be a value or cost when you first set up the inventory item." is wrong for an existing file/company. The amount here will not have any affect on the COGS value, unless a quantity was entered, which should not usually be done

 

The cost entered in the item screen is just for information purposes to populate a purchase document with a suggested cost,  that can be changed in the purchase document, depending on the current price the vendor is charging.  If you change the cost in the purchase document, the cost in the item screen does NOT change. 

The cost entered in the item screen does not create a transaction unless you also enter a quantity. This should never be done except when you are creating a new set of books for an existing company, to create the opening balances.  Otherwise you should always create new inventory with a purchase document; a Bill, Check or Expense. You should never enter the quantity in the item screen in an existing file/company.

 

 

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Re: Inventory transactions show in ledger without a value


@bglynn58 wrote:

Yes these transactions were generated from the sales transaction (the same is true if I make an inventory quantity adjustment).  We operate on an accrual basis.  The sales booked ok against AR and have subsequently been paid.

 

I have attached a copy of the GL Inventory account.  The bill from the vendor was processed previously and is reflected in the balance at the top.  As you can see from the transactions (I entered an inventory adjustment today to show this) they still do not pick up a value.  If I run the inventory valuation report the values reflect properly in that report.  The purchase date is before the sale date for most transactions, however the purchase (vendor invoice) is in AP but has not been paid (terms are 60 plus days). I have attached the GL for AP showing this.


It does not matter if bills or invoices are paid or not for inventory valuation

 

Some questions that come to mind:

- In the Bill on 9/24 did you use the same item as you used in the invoices?

- When you set up the inventory item did you enter a quantity, but zero cost?

- Did you leave the default linked accounts (for COGS and Inventory) in the inventory item set-up screen?

A screen shot of the Inventory Detail report for this item would be useful

Community Explorer **

Re: Inventory transactions show in ledger without a value

@RoseMarjorieA

I believe what we did was establish the sku and then edited the item and added the cost in.  Since then we have bought the item and have processed the vendor invoice.  I hesitate deleting the item because there are transactions associated to it (customer and vendor transactions).  If we delete it we would have to use the same SKU because it is in our sales materials.   Is it possible to delete and reuse the same SKU?

Thank you for your help.  I thought we did follow the help article that QBO had on setting up inventory but apparently not close enough.

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Re: Inventory transactions show in ledger without a value

Hi Malcolm,

- Yes we used the same items on the vendor bill (it brought them in from the purchase order we set up) and they are the same SKU.

- We did set the items up with no quantity originally.  We tried to set-up an estimate or customer order and it would not work unless we had a quantity on hand.  We went back and edited the SKU and added in a quantity (at this point I don't know that we had the cost on the item).  See attached inventory valuation.  It shows the first 500 were entered at 0 cost.  I suspect if I back date an adjustment for 500 units this might fix it - right?

- Yes we left the default accounts for sales and cost of sales alone.  

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Re: Inventory transactions show in ledger without a value

I backdated an inventory adjustment eliminating the quantity placed on hand before we entered the cost.  It fixed the problem.   Thanks to everyone for their kind advice and have a Merry Christmas!

Brian

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Re: Inventory transactions show in ledger without a value

Why did you make an inventory adjustment?

Community Explorer **

Re: Inventory transactions show in ledger without a value

When I reviewed the inventory register it showed that the quantity entered when we set-up the SKU went in at 0 value.  We entered a quantity so we could quote and take orders (without shipping).  I dated the adjustment before the actual shipment was received and then all transactions after that populated in the ledger.  

 

Thank you for your help on this.

Brian

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