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Join nowHere is what I have seen on my COGS for an item.
Whenever we do a refund receipt, it shows up as a negative in COGS. To me, that seems right because you are reversing the previous positive charge in COGS when you sold the item. For example, lets take SKU A as an example with a cost of $10:
Sold Sku A to billy bob for $20. This would show up as a $10 COGS expense
Billy Bob Returns the item which would then "put back" the $10 back in COGS as a negative.
This would show up in COGS as:
Sales Receipt $10
Refund $-10
The problem is when I go to resell that same item, it shows up as a COGS of $0 which makes me show a 100% profit. This doesnt seem right to me. To me, the COGS should be $10. So when Norma Jean buys SKU A for $20. It shows up on COGS as
Sales Receipt $0
So under this scenario, my profit is doing this:
Original Sale:$10
Refund: -$10
2nd Sale: $20
Resulting overall profit: $20
This cant be right.
Ive taken a snapshot for a sku i have in question. This is my inventory valuation summary for this product. Back in October. I had a refund of 4 items, and 2 items were purchased at $0 costs. The 2 items purchased at $0 cost is correct so please ignore that for now. Lets take note of the 4 that were refunded
But now here in January under the FIFO rule, those 6 items are being sold as $0 profit. 2 of those items should be correctly sold as $0, but the remaining 4 should not in my opinion.
Sure enough, as I check my COGS account for january, these 6 items are being sold at a $0 cost. (these 3 sales receipts have a total of 6 of these items):
Good day, @SnailBooks.
As replicated in my end, it's not the refund that was causing inaccurate. though, when you create a bill, the rate is 0 automatically COST shows 0 as well. The refund doesn't affect anything in your Cost, the basis of refund is when you create as a sales receipt, and the rate is 0 the FIFO COST will be 0 also. It depends on the rate you input in your bill.
For more details about how inventory works in QuickBooks, check out these articles:
Please don't hesitate to reply in the thread if you need further assistance. I'll be here to lend you a hand. Have a great day!
Thank you very much for you help! I am showing that a refund is indeed affecting our cost of goods sold as a negative amount. And you are correct, all of these scenarios are where a customer returns the item for a refund and the item is put back into stock. Here is a small screenshot of my cost of goods sold for just a few items that were issued a refund receipt this month:
We appreciate your screenshots, SnailBooks. This helps us understand your issue.
Let's first make sure the item is mapped correctly. Here's how:
Although, if the item is correctly mapped, I'd suggest reaching out to our customer care support. This way, an agent can take a better look at your reports. Here's how:
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