Almost anyone who tracks inventory will find a time when the merchandise on the shelf no longer matches the item count in QuickBooks. QuickBooks has a process specifically designed to work with this issue.
The process is located at Vendors->Inventory Activities->Adjust Quantity/Value on Hand.
The first field is Adjustment Type. There are three choices. QuickBooks will default to Quantity. This is by far the most used option.
Basically, this gives us the opportunity to tell QuickBooks, no, we don’t really have XX quantity on hand, we have YY.
The next field is the Adjustment Date. When the fields in the header portion of this window are complete you will select the items you want to adjust.
QuickBooks will show the on hand quantity of those items selected. That quantity will reflect the amount in QuickBooks as of the date chosen in the Adjustment Date field.
Adjustment Account is a very important field.
Any adjustments made will affect the asset account used in the asset field of the item setup window. This is usually Inventory Asset.
The account asked for in the Adjustment Account field is to expense the reduction (or addition) of inventory on hand. If we reduce our assets by reducing inventory, naturally that becomes an expense to the business.
A common mistake is to put the Inventory Asset account in the adjustment account field. This will result in no change to the dollar amount in Inventory Asset, the amount of inventory on hand. It must be expensed.
A reference number can be used, just like any other transaction.
The Customer:Job field is optional and would only be used in certain instances by a company using job costing and wanting to expense an inventory adjustment to a certain job.
Class is a field in the graphic and will only show if class tracking is being used in the company file.
Selecting the Find & Select Items button brings up the window as shown. Specific items can be manually selected to allow adjustments, or the Select All button can be clicked to allow all inventory items in the adjustment window.
In the above screenshot, new quantities have been entered into the Adjust window.
The new amounts were entered into the New Quantity column. The numbers in the Qty Difference column were entered by QuickBooks, doing the math between the on hand and new quantity amounts.
The bottom right shows the total adjustment that will be made. Once this transaction is saved, QuickBooks will reduce the Inventory Asset account by $427.14. It will also expense that same amount to whatever account is specified in the Adjustment Account field.
Hector Garcia, CPA
Certified Advanced QuickBooks ProAdvisor
12401 Orange Drive #136
Davie, FL 33330
954-414-1524
hector@garciacpa.com
