Cost of Goods Sold

Let me share some information about the Cost of Goods Sold, @Navid1. 

Usually, inventory COGS is often only impacted when inventory products are sold on invoices or sales receipts. You can view the Sales/Accounts Receivable transaction and the Inventory/COGS transactions, which credit the Inventory Asset account and debit the COGS accounts when you run the Transaction Journal Report for the invoice or sales receipt. 

I recommend checking the item's profile and the accounts associated. And make necessary changes.

You can refer to this article for more insights: Understand Inventory Assets and COGS tracking.

Stay in touch whenever you have additional questions about the cost of goods sold. I’m here to make sure you’re taken care of. Have a great rest of the day.

Hi, 

Thank you for your reply. It confused me when I pulled a report of COGS I saw some transactions that are zero amount from a bill, invoice & credit memo. At least, for a fact that should be an amount cause we put an amount on the "cost" for the COGS when adding new item in inventory. I think this is an error for having NO amount. 

I also know that Purchase order should not show any amount in COGS report correct? Only when the item got sold and it's should be on invoice part. But how come there are "BILLS" transactions that shows on COGS report? Is this an error as well? how come not all bills are recorded only few? 

Can you help on how to fix these issues with the COGS? I really really need your help. 

Thank you for your time, I appreciate it. 

Thanks for coming back to the thread and sharing some more details about the concern @LC44.

I want to make sure this COGS posting issue is corrected. Before anything else, I'd like to know if you're looking at the COGS in the Chart of Accounts or in Profit and Loss report? Any information will help me rule out this concern.

Please know that the only time your entries are associated to the COGS account is when it is used on the transactions. For example, you recorded inventory transactions, journal entries, or any transactions using the account. 

Also, purchase orders are non-posting transactions so they will not affect your balances or financial reports. Bills are also included on the report, again if they use the accounts related to COGS.

Regarding the 0 balances, try to check the transaction and see if there is an amount assigned to the line item and not zeroed out. You can do that by double-clicking the entry.

Please come back here again if there's anything else you need help with QuickBooks Desktop accounts and reports. I'll be right here to  help you out.

Hi Jen_D,

Thank you for that information. I was looking on the COGS in chart of accounts. 

What do you mean about this "if they use the accounts related to COGS"?

How would you know that you are using it in the correct way? 

When you create a bill the average cost of it times the quantity of what you sold (invoice) is your COGS correct? 

What if you have no bill just an invoice for an item because it is a renewed/or refurbished item - how the COGS be calculated. Since in my report it was showing zero amount mostly because there are no bill even though we put the COST of the item in the inventory. 

Thank you.  

Hello there, @Navid1.

I'll explain how QuickBooks deals with inventory assets, average cost, and Cost of Goods Sold (COGS).

QuickBooks automatically adds two accounts to your company file's Chart of Accounts once users create your first inventory item in your Inventory List. 

Here's an example of an account that QuickBooks created:

• 12100 - Inventory Asset - Other Current Asset
• 50000 - Cost of Goods Sold (COGS) - Cost of Goods Sold

Furthermore, inventory COGS is usually only affected when inventory items are sold on invoices or sales receipts. When you sell an inventory item, run the Transaction Journal Report for the invoice/sales receipt to see the Sales/Accounts Receivable transaction and the Inventory/COGS transactions, which credit the Inventory Asset account and debit the COGS accounts.

If you sell inventory that you do not own, you can push the next bills, checks, or credit card charges to alter the Inventory Asset and COGS accounts. The total amount on each side of the Inventory/COGS transaction is calculated as follows: Number of Items Sold x Average Cost of Item.

I'm also adding this article for your reference: Understand inventory assets and cost of goods sold track.

Let me know in the comment section for follow-up concerns. I'll be right here to assist. Enjoy your weekend.