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dsjd12
January 8, 2023
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How to show inventory dollars in the P&L

  • January 8, 2023
  • 3 replies
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I am trying to do the bookkeeping for the restaurant I work for. I'm currently going to school for accounting so the owner thought it would be a good idea to have me essentially become the company bookkeeper to gain experience since our last bookkeeper quit. I have no formal bookkeeping training yet, all that I know was taught by the owner who was doing this himself. I was taught to enter bills under the COGS-Food account, liquor under the CPGS-Liquor account, etc. From my account class I know that cogs is used for after goods are sold but we apparently use it to track all of our food and alcohol purchases, without resetting the account every month. We do not want to use QB to track our inventory as ours is always changing as a restaurant, we track our inventory in a separate system. That system tells us how much in inventory we have on hand and through separate calculations we can get the inventory usage too. Now my question is how do I put that in QB desktop so it shows up on the P&L? I need this for the CPA to get our taxes done.

Best answer by Rainflurry

@dsjd12 

 

This is fantastic experience for you.  Presumably, you mean "How to show COGS on the P&L?"  Inventory dollars are recorded on the company's balance sheet.

 

Technically, as you mentioned, COGS should not be posted to until after the sale.  However, posting all purchases to COGS and then adjusting based on period-ending inventory will produce the same COGS expense. 

 

COGS and inventory are inversely related.  If the inventory value in QB is lower than the actual physical inventory on-hand, you will increase (debit) inventory and decrease (credit) COGS.  Conversely, if the inventory value in QB is higher than the actual physical inventory on-hand, you will decrease (credit) inventory and increase (debit) COGS.  You will make a journal entry to make the adjustment and date it the last day of the period for the most accurate financial statements. 

 

 

3 replies

Nicole_N
Nicole_N
January 8, 2023

Hi, @dsjd12. I'm here to share some information about inventory showing up in the P&L report.

 

If you don't enter any transaction like a sale, it won't show up in the Profit and Loss report. That said, you should enter transactions to show recorded income so that it will show up in the P&L report.

 

Note that the P&L report shows your company's income and expenses.

 

For more information about COGS, see the QuickBooks Blog. 

 

To get a better understanding of your cash flow, learn how to set up and use different reports in QuickBooks Desktop. 

 

Feel free to leave a reply below if you have any other questions. I'll be here to help. Stay safe and have a good one!

Rainflurry
RainflurryAnswer
January 9, 2023

@dsjd12 

 

This is fantastic experience for you.  Presumably, you mean "How to show COGS on the P&L?"  Inventory dollars are recorded on the company's balance sheet.

 

Technically, as you mentioned, COGS should not be posted to until after the sale.  However, posting all purchases to COGS and then adjusting based on period-ending inventory will produce the same COGS expense. 

 

COGS and inventory are inversely related.  If the inventory value in QB is lower than the actual physical inventory on-hand, you will increase (debit) inventory and decrease (credit) COGS.  Conversely, if the inventory value in QB is higher than the actual physical inventory on-hand, you will decrease (credit) inventory and increase (debit) COGS.  You will make a journal entry to make the adjustment and date it the last day of the period for the most accurate financial statements. 

 

 

    AlcaeusF
    AlcaeusF
    January 24, 2023

    Hello Rainflurry,

     

    I have reviewed the solution you’ve shared and it's correct and accurate. Thank you for sharing your inputs to help address the issue.

     

    We love to see members supporting one another! Have a great day. 

    W
    workday
    August 27, 2024

    Hello 

    I could use some input to solve a problem.  I use Quickbooks for all our companies needs other than inventory.  Because of the nature of our company, it is not easy to input actual inventory because of a conversion factor.  I do however want to add an inventory dollar amount into our books and update quarterly upon physical inventory taken.  How do I input a inventory dollar amount into quickbooks?  Can I do this in a general journal entry?

    S
    Shania_C
    August 27, 2024

    Glad to have you here in the Community, @workday.

     

    Let me present some helpful tips so you can input an inventory dollar amount and record it in your general journal entry in QuickBooks Desktop (QBDT).

     

    To begin, if you are referring to inventory value, you can add it upon creating an inventory item. Let me guide you on how:

     

    1. From the menu bar, go to Inventory.
    2. Click New Inventory Item.
    3. Fill in the necessary information such as Inventory Part, Item Name/Number, Cost, Sales Price, Income Account, On Hand, and Total Value.
    4. Then select OK.

     

     

     

    However, if you need to adjust the inventory value for an existing item, you can follow the steps below. You can do this every time there will be a physical inventory taken:

     

    1. From the menu bar, go to Inventory.
    2. Select Item List
    3. Double-click the item you want to modify.
    4. Make the necessary changes.
    5. Hit OK.

     

     

     

    In addition, QBDT does not allow journal entries for inventory to maintain accurate inventory tracking and prevent errors in inventory valuation. Inventory transactions should be recorded through specific inventory-related functions. It's designed to ensure proper accounting practices and prevent discrepancies in inventory management.

     

    That said, before you make any adjustments to your inventory value, it's advisable to consult with your accountant. If you don't have an accountant, we can assist you in finding one nearby.

     

    Furthermore, you might also want to check these links for additional reference in tracking your inventories and labor cost-effectively in QuickBooks Desktop:

     

     

    However, if you are referring to something else feel free to get back to us by clicking the Reply button below or posting a new query. We are committed to supporting your business endeavors and hope you have a productive day, workday!

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