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Hareesh Kumar
Level 1

How to record Damaged Goods/Inventory in quickbooks?

Greetings.

In My Books of Accounts Finished Goods Hang from Last Six months, I need to Write off Total Value in Single Entry which was not reflect in my Books.

 

Please Do the Needful

 

Thanks and Regards

 

Hareesh Kumar 

RaymondJayO
Moderator

How to record Damaged Goods/Inventory in quickbooks?

Greetings too, @Hareesh Kumar.

 

Yes, I'm here to provide the steps you need to write off the total value of your finished goods that were hanged for six months. The process below won't cover a single entry, but it's the appropriate one to reflect on your books. With this, I'll guide you through them, depending on the product you're using. 

 

If you're using QuickBooks Online (QBO), you'll have to record the uncollectible invoice as a bad debt and write it off. It helps ensure your accounts receivable and net income will stay up to date.

 

To start with, let's set up a bad debts expense account: 

  1. Go to Accounting from the left menu and choose Chart of Accounts.
  2. Click New
  3. Select Expenses as the Account Type
  4. Choose Bad debts as the Detail Type.
  5. Enter “Bad debts” in the Name field. 
  6. Click Save and Close.

 

Second, let's create a non-inventory bad debts item from the Products and Services menu. Just select Bad debts as the Income account for this, as seen in the screenshot below. 

BadDebtsItem.PNG

 

Third, let's record a credit memo for the bad debt. Just select Bad debts in the Product/Service section and enter the total value in the Amount column. View the screenshot below for your visual reference. 

CreditMemoForTheBadDebt.PNG

 

Fourth, let's apply the credit memo to the invoice from the Receive Payment screen. For the detailed instructions, see Steps 2 - 5 through this article: Writing Off Bad Debt In QBO. Here's a sample screenshot of how it looks like in QBO. 

ApplyTheCreditMemoToTheInvoice.PNG

 

I recommend running the Account QuickReport of the bad debts expense account. It helps you track all the receivables you tagged as bad debt. Just go to the Chart of Accounts menu and enter its name in the Search box. Then, click Run report from the Action column. 

 

Once done, let's use the Inventory qty adjustment option to update the number of your goods in the program. It helps you match what you have in actual stock. Here's how: 

  1. Go to + New from the left menu and select Inventory qty adjustment under Other.
  2. Enter the Adjustment Date.
  3. Complete the details of the transaction.
  4. Click Save and close.

 

QBO will automatically record appropriate adjustments to your Inventory Asset and Cost of Goods Sold under Inventory Shrinkage accounts. For your reference, check out this article: Adjusting Inventory Quantity On Hand. For the value of your finished goods, you can edit it by going to the Products and Services list. You can also run any inventory reports to help you get real-time inventory status in the program. 

 

If you're using QuickBooks Desktop (QBDT), let's add an expense account to track the bad debt. Then, close out the unpaid invoice by going to the Receive Payments screen. For the detailed steps, visit this article: Writing Off Bad Debt In QBDT

 

After that, let's adjust the total value and quantity of your finished goods. For more information, see this article's Step 3Adjusting Inventory Quantity Or Value

 

You can always run the Inventory Valuation Summary from the Reports menu. It helps you review your inventory status and make sure everything is accurate in QBDT. You can also customize it to get the specific details you need according to your business needs. 

 

I'll lend a helping hand if you need anything else. Keep safe always, @Hareesh Kumar

 

Best regards, 

Raymond Jay

DoreenT
Level 1

How to record Damaged Goods/Inventory in quickbooks?

How about in the event that you purchase goods and find out that they have defects and you need to return them, how do you raise a debit note?? I can't find that provision

Rea_M
Moderator

How to record Damaged Goods/Inventory in quickbooks?

You can raise a debit note by recording a credit from your vendor, @DoreenT. With this, let me guide you on how to create one depending on the QuickBooks product you're using.

 

If you're using QuickBooks Online (QBO), you'll have to record a debit note by creating a Vendor credit transaction from the + New button. It's used to either record returns to vendors or refunds. This way, you're able to track the damaged item that you'll return to your vendor. Here's how:

  1. Go to the + New button.
  2. Select Vendor credit.
  3. In the Vendor drop-down, select your vendor.
  4. Depending on how you record purchases, enter the Category details or Item details
  5. Select Save and close.

 

Please see the attached files for your reference.

 

Once done, you can apply the vendor credit towards any open or future bill. For the step-by-step guide, kindly refer to this article's If you enter bills you plan to pay later section: Enter a credit from a vendor. It also explains how you can enter a credit once you enter expenses or write checks.

 

If you're using QuickBooks Desktop (QBDT), you'll have to Enter a bill to record a Vendor credit. Please see the attached screenshot below.

 

When your vendor processes a refund for the returned items, you can refer to this article on how to record it in QBDT depending on the scenario you have: Record a vendor refund in QuickBooks Desktop.

 

Both QBO and QBDT can generate a vendor report to let you track your expenses. All you have to do is visit the Reports menu and select the report you want. You can customize the one choose to filter the information you need. Select the version you have for the detailed steps:

 

Please don't hesitate to write a comment below if you have other concerns or follow-up questions about tracking vendor credits in QuickBooks. I'm just around to help. Take care always.

oooh2beepink
Level 1

How to record Damaged Goods/Inventory in quickbooks?

When I follow these steps, the Bad Debts on the P&L show as zero. I feel that I am doing something wrong. If I don't balance the invoice the amount of the bad debt goes on accounts receivable as a negative amount. 

JessT
Moderator

How to record Damaged Goods/Inventory in quickbooks?

Hi oooh2beepink,

 

Let me continue to help you out. Which steps did you follow?

 

When you declare an invoice as bad debt, your Profit and Loss will report the income (inventory sales), the expense (bad debt equal to the income), and the cost of goods sold, which is the purchase value of the items. Basically, the income is being offset by the bad debt, so the only expense is the COGS. Check out the detailed steps in this article: Write off bad debt in QuickBooks Desktop.

 

The replacement invoice is not included in this report yet.

 

On the other hand, you can check our Help Articles for QB Desktop should you need more references in the future.

 

Don't hesitate to return to this thread if you need more assistance with your transactions. I'll be happy to lend a hand.

oooh2beepink
Level 1

How to record Damaged Goods/Inventory in quickbooks?

Your p&l shows the bad debt amount. Mine shows zero. Maybe I set up the bad debt account incorrectly. 

 

Chart of accounts

 

New

 

Other expense in account type

 

Named bad debts 

 

Saved and exited

 

I then made a bad debt item

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

From list selected Products and services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected Non-Inventory

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Typed Bad debt in Name field

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selcted Bad Debts from the Income Account 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

I added a credit memo, then applied the credit memo to the invoice which zeroed everuthing out. 

 

 

 

 

 

 

 

It does not look like the picture you posted. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Daniela_A
QuickBooks Team

How to record Damaged Goods/Inventory in quickbooks?

Hi there, @oooh2beepink.I

 

 can see that a similar question about reimbursement checks was also asked in a separate thread. Let me share this link so you can follow the steps that are provided in that thread: https://quickbooks.intuit.com/learn-support/en-us/reports-and-accounting/re-how-do-i-track-damaged-...

 

The Community is always here if you need anything else.

Mrs_Array
Level 1

How to record Damaged Goods/Inventory in quickbooks?

I think you should not have used "other expense". In general, the "Other" options in QB do not report the same way.

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