Skip to main content
L
lubyluanne@gmail
August 2, 2022
Question

Need to get COGS to 0 after entering inventory incorrectly

  • August 2, 2022
  • 2 replies
  • 0 views

We are a nonprofit and DO NOT SELL INVENTORY (but decided to use inventory to track quantities of items on hand). Unfortunately we entered a value in the "cost" field when setting up each inventory item. We reduce inventory by creating $0 invoices (we manually edit the items to $0 rate) but this still effects our COGS account. Basically we are trying to use the inventory tracking in a way that won't impact any accounts. I can set all items to $0 cost going forward, but how do I edit our COGS back to 0?

2 replies

J
JamaicaA
August 3, 2022

Let’s work together to figure out what’s happening to your inventory and COGS accounts, @lubyluanne@gmail. I’m here to provide 2 options you can perform to zero out your COGS account in QuickBooks Online.

 

You’re unable to edit the item and reduce its cost. The price that you see in the cost block is usually the most recent purchase price. This means that the amounts shown for each account in your reports are based on the transactions that you generated. Thus, updating the amount of your items doesn't post any changes with it.

 

To fix this, you can utilize inventory adjustments and set the quantity to 0. This way, you can deduct the majority of the charges from the items this year. If the whole cost of the item is not distributed equally across all the items, the excess will remain.

 

Another thing you can do is to create a journal entry that will zero out your COGS account. I’ll show you how:

 

  1. Go to the +New button.
  2. Select Journal Entry under OTHER.
  3. Locate your COGS account.
  4. Enter the adjusting amount you wanted to zero out.
  5. Tap Save and close.

 

Here’s an article you can read to learn more about journal entry: Create a journal entry in QuickBooks Online. This contains a short video that’ll guide you through entering transactions so you can balance your books.

 

If you're unsure of which one to use, I highly suggest you contact your accountant. They’re able to provide an expert’s advice on correcting your inventory and COGS account. This way, we can ensure your books are accurate and you have reliable financial data.

 

You can bookmark these resources for ideas about how you can manage your reports and accounts: Reports and Accounting for QuickBooks Online.

 

Feel free to let me know if you require additional assistance with correcting your COGS account. It’ll be my pleasure to help you more. Stay safe.

L
lubyluanne@gmailAuthor
August 4, 2022

I adjusted all inventory to 0 and edited all costs and sales prices to 0. I'm trying to do a journal entry to fix all effected accounts but I can't get it to balance to do the entry. I'm using entering the account balances I see under chart of accounts. My understanding was that Inventory Asset would balance against COGS? Are there additional accounts that would have been impacted?

Rainflurry
Rainflurry
August 7, 2022

@lubyluanne@gmail 

 

If you are recording the cost of each item as $0, then how are you booking the item's cost as an expense to the company?  IMO, there's no reason you can't use COGS as your expense account for the items you give away.  Income will be accurately reflected whether you record the cost of the inventory sold as COGS or use another expense account.  If you track inventory, technically, you should expense it to COGS when it is sold - even if you sell it for $0.  That will keep your inventory quantity and value accurately. 

 

    J
    jesszi12
    August 3, 2022

    For this reason, the different methods for identifying and valuing the beginning and ending inventory can have a significant impact on COGS.https://nextgen-patientportal.com/ 

    Terms & ConditionsAccessibility statement