Solved: How can I adjust inventory without changing COGS?
can add a bit more about the inventory management in QuickBooks Desktop and how it affects the Inventory Assets and COGS accounts.
When you set up the inventory item you have the option to enter the item Cost. Here’s how:
- Click the Lists menu.
- Choose Item List.
- Locate your inventory item and double-click it.
- Fill out the Cost field, under Purchase Information. Enter the cost of the item when you purchased it.
QuickBooks uses the weighted average cost to get the value of your inventory and the amount debited to the COGS account once you sell your inventory.
Create an asset account called purchases and post all purchases of item for resale to that account. Periodically, weekly, monthly, etc value the inventory on hand, subtract that value from the amount shown in the purchases account and do a journal entry for the answer to the subtraction
debit COGS for that value
credit purchases for that value
2. Post all purchases to COGS. Periodically, but at least at the end of the year, you value the inventory on hand and do a journal entry.
debit the asset purchases account for that value
credit COGS for that value
Print the P&L
then reverse the journal entry
debit COGS for that same value
credit the asset purchases account for that value
This last journal entry, moves the value of what was on hand at the end of year back to COGS so the cost will be counted against the new year sales.