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LizSnay
August 24, 2021
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how do I write down value of inventory in quickbooks online?

  • August 24, 2021
  • 1 reply
  • 0 views

INVENTORY

 

I have a PPE client.  They bought stock at 2.00 but as mask wearing is down she wants to take a one time write down to $1.00.  How do I do this in QBO?

 

Best answer by JessT

Your instructions snagged at using a date after transactions.  I've attached before & after reports of my attempt to follow your instructions.  Without impacting vendor invoices which I already marked down I wonder if on 3/16/21 I could post somehow:

 

1200H  -387250 units    -$874684.80

             +387250            +$.00

 

1400H  -25980   units    -$74302.80

             +25980             +$.00

 

Liz


Hi LizSnay,

 

Thank you for following up on this. I'll be happy to add more details.

 

QuickBooks follows the First In, First Out (FIFO) concept, so the realized cost of the sold item will always be based on the purchase cost. Therefore, if your client bought the item on 3/16/21 and sold them, you only need to edit the cost of the item in the purchase transaction on 3/16/21.

 

Changing the starting value of the item itself has no effect on previous transactions. The cost revaluation should be done on the purchase transaction (bill, check, expense)

 

Let us know if you have any other questions in mind. We're just right here to help you with your inventory.

1 reply

JasroV
JasroV
August 24, 2021

I'd be happy to walk you through the steps on how to write down your inventory value, Liz.

 

You can go to your Product and Service page and adjust the value of your inventory from there. To begin with, you'll need to create a sub-account of your Cost of Goods Sold (COGS) account and use it for the adjustment. I'll show you how.

 

  1. Go to the Accounting menu in your QuickBooks Online (QBO) account.
  2. Select Chart of accounts.
  3. Click New to create a new account.
  4. Select Cost of Goods Sold as the Account Type.
  5. Chose a Detail Type and enter a name for the account in the Name field.
  6. Check the box labeled Is sub-account and choose the COGS account as the parent account. 
  7. Then click Save and Close.

 

You can also check this article for more details: Add an account to your chart of accounts in QuickBooks Online.

 

Once done, we can now adjust your inventory value. I'd propose working with your accountant for additional guidance. This way, we can ensure the accuracy of your accounts after making these changes. If you're not affiliated with one, you can visit our ProAdvisor page and look for one from there.

 

When ready, you can follow these steps:

 

  1. Go to the Gear icon and select Product and services.
  2. Locate the inventory item you want to adjust, and select Adjust starting value from the Edit drop-down menu. 
  3. A warning message will pop up notifying you about the effects of changing your inventory value. Click Got it! to close the message.
  4. From the Initial cost field, change it to 1.
  5. Select the COGS sub-account you've created in the Inventory adjustment account field. 
  6. Then click Save and close.

 

Let me also add this link that you can read for guidance in case you need to adjust your inventory quantity: Adjust inventory quantity on hand in QuickBooks Online.

 

I'm just a post away if there's anything else you need assistance with adjusting your inventories. You can also add in your response if you have any other QBO concerns. I'll be more than happy to help you out anytime.

    L
    LizSnayAuthor
    August 24, 2021

    Will changing the starting value change all past cost of goods entries?  I want to value to reduced on the stock on hand as of 3/15/21.

     

    For example let's say that I want to change 387,360 Part1200s from a value of $874684.80 to $437342.40 as of March 16th without effecting 2020 or the financials from 1/1/21-3/15/21.  Do your steps work?

     

    I am the accountant so I'm prepared to make journal entries is needed but will I have to update all of 2020 when there were 1000s of sales of PPE?

     

    Thank you,

        Liz

    JasroV
    JasroV
    August 25, 2021

    I appreciate your clarification and prompt reply, Liz.

     

    I'd be delighted to clear things up for you. You'll just have to ensure there are no transactions created on the date (3/15/21) you've selected for the adjustment. This way, it won't affect any of your past entries. 

     

    You can adjust the date of the adjustment in the As of date field. Moving forward, only inventory items on hand will be affected by the changes.

     

    To learn some tips in seamlessly running your inventories in QuickBooks Online (QBO), check out these articles for reference. These can guide you through the process of restocking, edit inventory adjustment, and check the status of your inventory:

     

     

    You're always welcome to tag me in your reply whenever you have other questions about handling your inventories. I'll be more than happy to work with you again. Stay safe!

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