What accounts can i move the opening balance equity account?

info.union8000 · ‎September 26, 2019

I tried entering my inventory items one by one then the amount goes to opening balance equity account. What other accounts can i move the amount to zero out the opening balance equity?

Rustler · ‎September 26, 2019

@ union

If you create an item with qty and cost, then yes that cost posts to OBE be default in QB.

OBE is an account intuit created so it did not have to deal with equity distribution in multi owner businesses. After all starting balances are entered, then you clear OBE to owner/partner equity with a journal entry

debit OBE, and credit owner/partner equity

For a company taxed as a sole proprietor (schedule C) or partnership (form 1065), I recommend you have the following for owner/partner equity accounts (one set for each partner if a partnership)

[name] Equity (do not post to this account it is a summing account)
>> Equity
>> Equity Drawing - you record value you take from the business here
>> Equity Investment - record value you put into the business here

View solution in original post

Rustler · ‎September 26, 2019

@ union

If you create an item with qty and cost, then yes that cost posts to OBE be default in QB.

OBE is an account intuit created so it did not have to deal with equity distribution in multi owner businesses. After all starting balances are entered, then you clear OBE to owner/partner equity with a journal entry

debit OBE, and credit owner/partner equity

For a company taxed as a sole proprietor (schedule C) or partnership (form 1065), I recommend you have the following for owner/partner equity accounts (one set for each partner if a partnership)

[name] Equity (do not post to this account it is a summing account)
>> Equity
>> Equity Drawing - you record value you take from the business here
>> Equity Investment - record value you put into the business here

SCrawford · ‎September 26, 2019

The cost of inventory items should not go to Opening Balance Equity (OBE) account and it can not be moved to another account since it would just lock it in to that account.

When you create inventory, create it with a quantity of zero (in the "initial quantity on hand" box). Then use a Bill under Vendors to bring inventory in. As long as you set up the inventory item(s) with the correct Inventory Asset, Income and Expense accounts, Quickbooks will do what it is supposed to. But if you're receiving inventory by creating the item and entering the quantity under the "initial quantity on hand" box, it will incorrectly add to the OBE & be locked in there. You want it to go to the Inventory Asset account when received - then when that item sells it will send that cost to the Expense account (Cost of Goods Sold) and the retail to the Income account (Sales Income). Accomplish this by only brining in inventory (qty) on Bills.

Sofie12 · ‎January 25, 2020

But what if the client didn't create a quantity zero and the and the balance went to OBE how do you take it out of OBE? I have a client who did that not the OBE balance is high with all inventory, how do I get OBE to zero? whats the best JE

Amasters · ‎December 17, 2020

Sofie12, were you ever able to figure this out? I'm having the same issue and I need to move inventory out of OBE

MaryAnn_E · ‎December 17, 2020

Hi there, @Amasters.

You can create a journal entry to remove the asset from your book since you no longer track inventory:

Click the Plus icon.
Choose Journal Entry.
Enter the necessary information.
Click Save.

I also advise reaching out to your accountant who can tell you which process would be better for your specific books.

Let me know if you have additional questions for me by adding a reply. I'd be happy to help you further. Wishing you and your business continued success!