Starting Inventory Asset Balance

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@jtluongo wrote:

See attached photo. I am trying to enter a starting balance for my inventory but keep getting this error. I don't understand why.

 

Its telling me I need to select a non-inventory account for my deposit.

 

Any ideas? Im trying to enter my starting balance for my inventory as of 12/31 I am new to Quickbooks. This is the first year I will be using it.

 

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@jtluongo 

For the Inventory Asset account, you don't add starting balance when creating a new account. Just create a new account and ignore opening balance and save.

How to add the opening balance for my inventories?

You add the Inventory Items to the Products and Services list.

Go the Products and Services page from the Gear icon on top > Lists > Products & Services > Select New green button > Select Inventory (*) > Fill out the Product/Service Information screen including Initial quantity on hand, as of Date and Cost field** > Save.

* Inventory type - if you don't see Inventory type on the Products and Services information screen, you will need to turn this on Gear settings (Gear icon > Your Company > Account & Settings > Expenses > Bills & Expenses > Show Items table on expense and purchase forms ON > Save.

** Initial quantity on hand x Cost field = Opening Inventory Value.

In QBO, the Inventory feature is available in the Plus plan and Advanced plan.

Hello! Thanks for this information -- but any idea how to do this if we're not managing Inventory directly in QBO? 

My situation: The business switched to QBO recently and I'm trying to open all accounts as of the first of the year. We are using a different inventory & sales platform and are planning to manage our inventory values and sales receipts in QBO through the use of monthly Journal Entries. 

I was going to use a Deposit into that account (from the account Opening Balance Equity), but QBO doesn't seem to let me do that--it says to select a different account. So then I thought I'd use a JE to create a starting balance for Inventory. I've read elsewhere, though, that JE's should not be used for opening balances (though I don't fully understand why this would be a problem). 

Any thoughts for the correct way to handle this? 

Thanks!

Hi, uzer_name.

You'll want to use a journal entry to record the starting balance for inventory. Let me provide you a few information and help you correctly record the balance

When dealing with an asset account, such as cash, a debit entry to the account will increase its balance, while a credit entry will decrease it. The entry to record the opening balance of cash always requires a debit entry equal to the amount of cash your company receives. However, the trickier side of the journal entry is crediting the appropriate account.

When your company receives part of the cash as a result of a loan or other bank financing, the credit side of the journal entry must increase a liability account to reflect the debt. I also recommend reaching out to your accountant for other ways on how to record the inventory starting balance.

For future reference, you can enter an adjusting journal entry for the total balance: Enter Adjusting Journal Entries in QuickBooks Online Accountant.

Let me know if you need anything else. I'll make sure to help.

Awesome - thanks! I'll go the JE route to give myself a starting inventory balance. I had only not done so because I read in a forum that I shouldn't be...but I think that must've been in reference to using it along with the actual inventory system in QB, which I'm not using. 

Thank you!

Thanks for the reply, @uzer_name.

You're most welcome! If you need anything else, please don't hesitate and reach back out to the Community. We're always happy to help.

Wishing you and your company continued success. Have a safe weekend ahead.