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DS127
June 18, 2024
Question

Migration issue - Cost of Good Sold account is way off after migration with inventory

  • June 18, 2024
  • 1 reply
  • 0 views

I've done a lot of migrations from QB Desktop to QBO and I always have a problem when inventory is involved (only a couple of my migrations had inventory, and they were awhile back). So help...

 

I compressed the QBD data to bring in only 1/1/2023 and forward. The 2023 taxes are done and on the old QBD system so I can make entries for 2023 if I need to.

 

BUT...the issue is my COGS is off, on the order of magnitude of over $7 million!  I need the COGS to be right for the 2024 P&L statement to date.  

 

Do people out there have suggestions other than to book the $7 mill amount to Opening Balance Equity?  Which is not what I'd like bc that messes up the balance sheet for 2024.  Also,  the inventory numbers are NOT correct in QBD...the client told me this coming in...it's a mess...The $7 mill comes about mostly from JE's QBO made on the conversion for each product (some 2000) - says, "Inventory starting value from Desktop" (which  are incorrect to start with).  

 

Or maybe I should book that COGS correction to something like "Inventory Adjustment" but of course that affects the overall COGS number.  Maybe I should just live with that and warn the CPA when she does the tax returns?

 

Thoughts, anyone? 

Thanks.

 

 

 

 

 

1 reply

4
4Gal
June 18, 2024

Run the Verify/Rebuild Data utility in the condensed file. Did you encounter any error message?

S
ShyMae
June 18, 2024

I appreciate you sharing your concerns in detail, DS127. Dealing with a significant difference in your Cost of Goods Sold (COGS) after migrating is challenging. I'll outline below the necessary steps to correct this.

 

Keep in mind QuickBooks Online follows the First in, First out (FIFO) for inventory accounting. This method means that the earliest inventory items purchased are considered sold first.

 

Once you migrate, you'll need to set the FIFO start date. The system will then recalculate the inventory based on this date and make the necessary adjustments.

 

Incorrect cost and initial quantity during the setup will result in an inaccurate value in the inventory asset account and COGS. Here's a step-by-step guide on how to correct this:  

 

  1. Hover over the Gear icon. Select Products and Services.
  2. Locate the item, then press Edit from the Action column.
  3. Pick Starting Value.
  4. Click Got it.
  5. Enter the item's correct quantity and cost.
  6. Hit Save and Close.
     


For more detailed information, check out this article: What is FIFO and how is it used for inventory cost accounting?

 

Regarding the tax returns, you can consider discussing the options with your CPA to determine the best approach for your situation.

 

Moreover, you can visit these resources as a guide to managing your inventory and account effectively:

 

 

Correcting the starting value can indeed help correct your COGS. It's essential to pick an approach that aligns with your financial reporting needs. If you have any additional queries, feel free to share them with us. Stay safe, DS127! 

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DS127Author
June 18, 2024

ShyMae -

good idea.  

Another thought I had...maybe I just turn off inventory tracking until we actually have a physical count and thus the true values?

What would the impact be if I did this?

 

The products are in QBO now basically so that they can put them on invoices so I don't want to lose the massive product list with all the prices. Re: valuation, all we really need is a value for the end of the year to complete the tax returns (yes, we ARE the CPA's on this) :).

 

Thoughts, anyone?

Thanks!

 

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