How to record Damaged Goods/Inventory in quickbooks？

debit COGS (for purchase value of the damaged inventory)
credit the asset account for inventory purchases 

Never Debit COGS and Credit inventory, if you are tracking inventory by actual Inventory Type items and Name; you just broke the relationship between the account balance and the item Values. That is a mistake. You use the Adjust inventory function, not a JE, because you must list the Actual Products you want to affect, by Quantity.

Hi, I have a similar situation that I need help with in QBO, if you might be able to help answer. Here is my scenario:

• The wrong items were shipped to a customer after they paid the invoice.
• Because it was our mistake, We then ship the correct items at no charge if the new items actually cost more than the original. When they cost less we refund them the difference.
• Sometimes they don't/can't return the incorrect items to us because they are custom-fabricated items specifically for their use.
• How do we record the loss of the replacement products we shipped out, since we aren't refunding the customer at all for the original sale?
• PS: we don't have inventory tracking turned on in our QBO.

Thanks for any insight you can provide.

Hi smiramontes19, 

Since you don’t have the inventory tracking turned on, you'll want to create a journal entry to record the loss. Click the Plus ( + ) icon and choose Journal Entry, under the Tools column. 

However, it's best to consult an accountant to help you identify the affected accounts. 

The Community is always open to help you if you have other questions. 

@Catherine_B

Please learn from this Input. Nothing here is done using JE; because it is Sales and has to be managed as Sales using Customer Activities.

@smiramontes19

Let's break this down:

"The wrong items were shipped to a customer after they paid the invoice."

List the same item on a Credit Memo (customer return/refund transaction) to show the Reversal of that sale.

"Because it was our mistake, We then ship the correct items at no charge if the new items actually cost more than the original."

This is the New Invoice. You Apply that Credit Memo to this invoice.

"When they cost less we refund them the difference."

The credit memo either leaves an amount Owed to the customer (which you refund from the credit memo) or the Invoice is not fully paid by applying the credit memo, and the customer owes you that balance.

"Sometimes they don't/can't return the incorrect items to us because they are custom-fabricated items specifically for their use."

It's still up to you, if you want to show the Wrong item is "refunded/returned" = Credited Back, for purposes of Sales management. Or, you an use a Noninventory product item for "RMA" when you don't get the Actual Item returned, which you are not Stocking and tracking as such, anyway. Think of what You want to see on your reporting:

RMA only

Or, RMA when there was not a Return of the actual sold item(s)

That's your choice.

"How do we record the loss of the replacement products we shipped out, since we aren't refunding the customer at all for the original sale?"

Think it through differently; yes, you are Crediting Back a Value, against an Item of your choice for the reversal of the original sale. That Value is then being Refunded, applied to the Replacement sale, or Some of Each function.

if there are damaged goods in the inventory, how can record this transaction??? such as how to remove damaged inventory...

You dispose of damaged goods, enter the loss for theft or "shrinkage" by using the Inventory Adjustment function.

I have a question

My inventory asset was damaged on the way to a trade fair i was attending. It was never sold to a customer. I received payment for the item + shipment costs (international as it was an import) + shipment costs to the trade fair + customs duties..

Now i need to record the insurance payment but dont know how..

The item was taken into inventory on 09/09/2018 but the insurance payment was 02/04/2019

Can you please help me how to record this on QB

Hello there, Ozusa.

I'd be pleased to guide you in recording insurance payment in QuickBooks Desktop.

First, you'll need to make an inventory adjustment to adjust the quantities to the actual count.

I'm adding this article for more information about how to make inventory adjustments in QuickBooks Desktop: Adjust inventory quantity or value.

Once done, you can Make Deposits and record the deposit of the insurance check and use your Miscellaneous Income account in the From Account column on the deposit screen.

Here's how:

1. Go to Banking.
2. Click Make Deposit.
3. Choose a customer and enter necessary information.
4. Use your Miscellaneous Income account in the From Account column on the deposit screen.
5. Click Save & Close.

If you don't have a miscellaneous income account, you can create one by following the steps below:

1. Go to List.
2. Click Chart of Accounts.
3. Click Account drop down arrow and choose New.
4. Choose Income and click Continue.
5. Fill in the information needed.
6. Click Save & Close.

You'll want to read this article to learn more about creating an account in QuickBooks Desktop.

You've got me here if there's anything else you need to know more handling insurance payment in QuickBooks. I'll be around to help you some more.

I would Dr Sales Discount A/C Cr. Accounts Receivable for Customer's Account ( for the reduction in charge to Customer)

I would Dr Sales Discount A/C

Cr. Accounts Receivable for Customer's Account ( for the reduction in charge to Customer)

because ( damaged  goods  kept  by  Customer.

The real question for me was is this a contra-income charge to the gross margin, or is it an expense below the gross margin line.  I guess qbteachmt thinks it is a charge to an income account, which lowers gross  margin.  It would be interesting to hear the logic.