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Inventory Adjustment Question

Forum|Forum|3 years ago
January 3, 2023
1 reply
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Happy New Year!!!

Last year in July I ordered 50 posters to sell. The order was printed wrong with defects. I was not charged for them. Instead, the company just sent me a new batch of 50 posters corrected and printed well.

Before I got the good replacement posters order in, I had a client that needed to get some posters for an event he was doing, and did not mind that they were defective, so I sold him some to get him out of a bind. I didn't want to do this, but I also wanted to help him since he couldn't wait until the good order came in.

I never entered the bad posters into inventory because I am going to trash them and I did not get charged for them. They just sent me new ones later.

Now I have an inventory issue, because it shows that I sold more than the amount entered into inventory. I am off by 9 posters that client purchased when he purchased the bad posters from me.

Questions:

1. Do I enter the bad posters into inventory to fix this as a zero charge order?

and if YES, how do I make the rest ( 41 quantity ) bad one as damaged inventory to take them out of inventory ( except for the 9 bad ones that the client purchased ).

2. OR, do I just make an inventory adjustment to add the posters needed to fix my inventory count and not enter the bad batch of posters?

Thank you for your time!

Bill

QuickBooks Desktop

Best answer by Rainflurry

@Rainflurry , thank you!

When you say "If you want to put those 25 posters into inventory, you can enter a bill for 25 more at $0.00.",

This bill I am entering, is that another sales bill from the vendor of the posters? ( Like the way I am entering the vendor bill for the 9 posters @ $0.00/ea and dating it prior to 12-9 so that I can complete the invoice of 15 posters to and receive the payment. )?

I just enter another different bill that same way? Is that correct?

Thanks again!

@billhdz

You got it. Just enter another bill for 25 items of that particular poster at $0.00 each and QB will put 25 more into inventory and the bill (since it was entered at $0.00) will show as paid. I would date the bill as of the day you decided to put them into inventory.

Rainflurry

Level 11

@billhdz

Presumably, your QB inventory shows 9 fewer posters than you have on-hand, correct? If that's the case, I think the best solution is to create a bill from your vendor for 9 posters at $0.00/each. That will put 9 posters into inventory and will recalculate your average cost to include the 9 posters you received free of charge.

B

billhdzAuthor

@Rainflurry

Thanks for the reply.

1. If I do it this way, will any of the invoices I already created from poster sales get messed up?

How does Quickbooks handle those entered from the created bill from my vendor for posters at $0.00/each?

2. When Quickbooks recalculates the average cost to include the 9 posters when they are entered at $0.00/each, what does that do to the invoices or sales numbers?

3. Will doing an inventory adjustment instead something to consider?

Thanks!

Rainflurry

Level 11

@Rainflurry

By the way, why not just enter one vendor bill for 9 posters @ $0.00/ea PLUS the other 25 posters @ $0.00/ea together as one vendor bill for 34 posters @ $0.00/ea? Is there a benefit to separate them into 2 vendor bill using 9 and then 25 instead of together?

Just trying to learn a little. Thanks!

@billhdz

Good point. Yep, that would work fine (34 items on one bill). And, since that is really what happened - you salvaged 34 posters from the 50 ordered - it is most accurate to enter all 34 received prior to 12-9. The only benefit to separating them into two bills would be if you want different dates that the items were received. So, if you create a bill for all 34 posters received prior to 12-9, your COGS for the 12-9 invoice will be calculated using all 34 posters received at $0.00, which will lower your COGS and increase your profit. The bottom line is that you should do it right and date the bill as of the vendor bill date for the posters you are putting into inventory. Changing dates to influence your COGS calculation is improper accounting.

Thanks for the kind words. We started and grew a number of retail businesses over the past 20 years and recently sold them all. After several years in retail and not understanding accounting, I went back to school and got a master's degree in accounting so I could be in charge of all bookkeeping/accounting/tax for the corporations. Now, it's fun to help out other business owners and bookkeepers as needed.

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