Quantity on hand for some inventory items are negative and I cannot close my book because of that. How do I update inventory quantity when I enter a bill (Purchase)?

Let's fix your negative quantity on hand, bbehrouz-getgene.

The Quantity on Hand being negative is caused by selling an item you don't have in stock. I've listed below what causes negative inventory:

• You simply more products than you actually had.
• You didn't enter all of your purchase orders into QuickBooks.
• You miscounted your physical inventory so the quantity in QuickBooks is different.
• The quantity you got from your vendor didn't match the purchase order in QuickBooks. This can cause a miscount.
• You didn't convert your purchase orders to bills. QuickBooks only counts items as inventory after you create a bill.

Please refer to this article for the detailed steps on fixing negative inventory: Fix negative inventory issues in QuickBooks Online.

For additional references about managing inventory in QBO, check out these articles:

• Adjust inventory quantity on hand in QuickBooks Online.
• Can I track inventory manually in QuickBooks Online?

Feel free to leave a comment below if you have any other questions about inventory management, @bbehrouz-getgene. I'm always here to help. Have a good day!

Thank you for your information. I tried clicking on the link for more info but the link was deleted.

So in order to update quantity when we purchase, is to create a purchase order and change it to a bill?  We do not use purchase order when we purchase from our vendors. It there a way to update quantity under a bill instead?

Hello there, bbehrouz-getgene.

I can help you record your purchases to balance out your quantity on hand. 

Negative Inventory is caused by entering sales transactions before entering the corresponding purchase transactions. Yes, you can directly create a bill to balance up your quantity on hand. 

Let me show you how: 

1. Click the +New icon and select Bill.
2. Enter the vendor's name and bill details.
3. Select the items and the number of quantity to add.
4. Click Save and close.

You can check out this link that will help you track the things you buy and sell, and the status of your inventory: Use reports to see your sales and inventory status.

Keep me posted if you have additional QuickBooks questions, bbehrouz-getgene. I'm always here to help.

Thank you Catherine for your help.

So this is very helpful and would resolve the process moving forward.

However, how can I adjust the quantity on hand for the time frame that we did not update bills for quantity for?  

If I adjust the quantity on hand manually that would change all of our cost of goods sold value for previous months? That would not be acceptable. Please advise. Thank you Catherine. 

You're most welcome, @bbehrouz-getgene.

Please know that you can reach out to the QuickBooks Community at anytime. We will always be here for you. 

Let us know if you have any questions or concerns. Take care and have a wonderful day ahead! 

I have one follow up question though.  This solution will help with a moving forward process. However, how can I adjust quantity on hand for the time frame we did not input item quantities under bills?  If I manually adjust quantity on hand, it would impact our cost of goods sold for previous months which the book is open and we do not want that. Is there any solution for quantity on hand adjustment without impacting COGS for previous months? 

I have one follow up question though.  This solution will help with a moving forward process. However, how can I adjust quantity on hand for the time frame we did not input item quantities under bills?  If I manually adjust quantity on hand, it would impact our cost of goods sold for previous months which the book is open and we do not want that. Is there any solution for quantity on hand adjustment without impacting COGS for previous months? 

Allow me to provide a few things about quantity on hand adjustment, bbehrouz-getgene.

Inventory is the main component for calculating the Cost of Goods Sold reported in the income statement. Thus, adjusting them without affecting the COGS account isn't possible. Any changes made to the inventory will always affect your company's Current Assets in the Balance Sheet and the COGS accounts. I recommend checking with an accounting professional for other ways on how to do it. They can provide you with the best legal and accounting advice on what you can do to get past this hurdle.

You might want to check this article for more information: Adjust Inventory Quantity On Hand In QuickBooks Online. Furthermore, you'll want to know the status of your inventory. We'll show you which reports that you want to see. Please check this out: Use Reports To See Your Sales And Inventory Status.

Feel free to let us know if you need further assistance with inventory items. We're here to make sure that everything is taken care of.

Thank you Maria for your information.  What if I close the book for previous months and then adjust the quantity on hand? In this case will I have a different inventory and Cogs as a result of this change? 

Glad to have you back here in the Community, @bbehrouz-getgene. I'm here to clear things up for you about inventory adjustments in QuickBooks Online (QBO).

When you adjust an inventory's quantity on hand, it affects the stock in your Cost of Goods Sold account. Please note that this takes effect even if your books are closed.

Furthermore, if you still have some confusion with inventory adjustments, I recommend seeking help from your accountant. They can provide more expert ways of dealing with this situation.

Additionally, I'll provide this article about setting up and tracking inventory in QuickBooks Online. This will help with tracking what's on hand, getting alerts when it’s time to restock, and see insights.

Let me know in the comment section if you have any other questions or concerns with inventory adjustments. I’ll get back to answer them for you. Have a wonderful day!