 QuickBooks Online 2024 Inventory Quantity Adjustment Form Get ready and some coffee because we're diving into it with Intuit's QuickBooks Online Here we are online in our browser searching for QuickBooks Online Test Drive looking for the result that has Intuit.com in the URL. Intuit being the owner of QuickBooks selecting the United States version of the software and verifying that we're not a robot. Opening up reports like we do every time reports on the left hand side in the favorites we're going to right click on the balance sheet open link in a new tab right click it on the profit and loss open link in a new tab let's go to those tabs up top that we opened middle tab closing the hamburger there's our balance sheet tab into the right closing the hamburger there's our profit and loss of the wise no one has the income statement back to the first tab that's the setup process that we do every time we're going to do our data input on the first tab and then look at the results to the reports to the right selecting the plus button on the drop down we've been looking at the forms that are populated within each cycle customer vendor and then we went over to the other area which isn't actually really a cycle but forms and activities that are often used within a cyclical period and therefore QuickBooks still wants to put them over here first a word from our sponsor yeah actually we're sponsoring ourselves on this one because apparently the merchandisers they don't want to be seen with us but but that's okay whatever because our merchandise is better than their stupid stuff anyways like our trust me i'm an accountant product line yeah it's paramount that you let people know that you're an accountant because apparently we're among the only ones equipped with the number crunching skills to answer society's current deep complex and nuanced questions if you would like a commercial free experience consider subscribing to our website at accounting instruction.com or accounting instruction.thinkific.com in the drop down that we typically use when we do the normal kind of kind of accounting process transactions so this time we want to look at the inventory quantity adjustment form so this will be a form that will only be useful you'll typically only need it if you're selling inventory number one and number two if you're tracking the inventory within the QuickBooks system so quick reminder here if you deal with inventory that's going to add more complexity into your accounting system and then the question will be do i want to track inventory within QuickBooks you may not always want to do it you might have like a Shopify store or be selling stuff on amazon and those platforms might be tracking the quantity of inventory already we talk about this possibly in another section or or course dive into that in a little bit more detail but just note that you might then just track in QuickBooks using a periodic type of inventory system rather than trying to track each of the units as they're sold on a perpetual inventory system or you might be using some system and having the inventory tracked in excel or some other worksheet in which case again you would track the quantity in the other worksheet and then adjust it periodically in QuickBooks using your cost of goods sold calculation which would be beginning inventory plus purchases gives you the inventory available for sale minus the ending inventory which you would know because you're going to do a physical count you also have to do with flow assumptions most likely life of FIFO weighted average but we'll talk about that later so this this will be the general idea we have inventory so obviously the quantity adjustment would be that if we're tracking inventory on a perpetual inventory system then it's going to track the inventory real time we should have the exact amount correct in our system however it won't be correct if problems happen such as shrinkage happened or something like that theft happened some some punk kid keeps on coming to our work site and stealing all of our stuff just for the just for the fun of it for it seems like i don't even know what he's doing with it for crying out anyways so if that's happening then we're gonna have to make adjustments periodically to the physical count that we're seeing so let's just recap the inventory process let's go down here in the sales area and remember that if you're going to be dealing with inventory you're going to set them up in your products and services so we set them up in the products and services i'm going to close up the hamburger and then let's just add an inventory item just so we get an idea of that process it would be an inventory item as opposed to a service item i'm just going to call it item number one and we're going to say that it's going to be now the quantity on hand i'm going to say that there's 10 on hand that i'm just going to put on hand at this point in time which means quick books will make a journal entry for it to to record the purchase of it i'm going to say that they're on hand hold on a second what did i do i don't want help i want to put it on hand as of the first of december reorder point i'm not going to put a reorder point here i'll just keep it blank inventory account is the account that will be increasing and decrease when we purchase it with a bill or check form and when we sell it with an invoice or sales receipt form the sales price let's say is a hundred dollars let's say it's a hundred and twenty dollars income account what's going to be recorded sales tax will be applicable and we're going to purchase side is going to be the cost of one hundred dollars so we buy them for one hundred we sell them for 120 when they're put on the books they're going to be put on the books at one hundred dollars not the marked up one hundred and twenty dollars there so i'm going to say save it and close it and so now if i go to my reports on well if i scroll down i should be able to see this item now so now we have this item and if i made an invoice if i went to my plus button and made an invoice then i can see my items here this is the stuff that i'm going to be selling right i'm going to sell my item as we saw in invoices in prior presentations and as i sell this it will record it on a perpetual inventory method meaning that inventory is going to be decreased in units as well as dollar amount uh as we go because it'll track it in the sub ledger let's take a look at that sub ledger i'm not going to record it i'll close this out and say do you want to leave without yes let's go to the balance sheet and let's run it to update it there's our inventory account one five nine six twenty five if you're doing this on a periodic system and tracking the inventory outside in excel or your Shopify store amazon or whatever then you would simply adjust this dollar amount possibly periodically based on your physical count that you've done elsewhere or another system but if you're tracking it within quickbooks quickbooks needs to be able to update every time you make a transaction that includes inventory such as the purchase of inventory sale of inventory with invoices and sales forms so we need a sub ledger let's go to the tab to the right right click on it and duplicate this tab and i'll open up a sub ledger just to show that process we're going to go to the reports on the left hand side close the hand boogie type in up top inventory valuation summary so now you can see that this is our our inventory here's the 10 that we purchased i basically purchased it when i put it on the books because i said there was 10 quantity on hand so it added 10 on the books and they're they're they cost a hundred dollars so that means we have a thousand dollars notice it's not a hundred and twenty dollars the sales price it's a hundred dollars that's what they're on the books for what we purchased them for and so that ties out to all of that inventory ties out to the one five nine six twenty five which is on the balance sheet uh one five nine six twenty five and it gives us the units that we have uh over here which is going to be the quantity so we could track the quantity as well so what if i go in and i count my inventory and some punk kid stole my stuff right off right out of my warehouse for crying out loud it's going on with the neighborhood these days it's ridiculous in a case so then we're gonna we're gonna go to the first tab we could go into the drop down and we would say that we want an inventory quantity adjustment inventory quantity adjustment and so let's say this happened on uh the current date usually the date of the physical count that happens note that we're tracking it perpetually so you you might say hey i don't need to adjust the inventory because the inventory is being adjusted when i purchase it and sell it i don't need to do a periodic adjustment but we still need to adjust it and we still need to do a physical count otherwise we wouldn't know that there's shrinkage something got stolen something spoiled something is obsolete or whatever and we have to get get rid of it or else you know something right so if that's the case then we we can go over here we're going to say let's say that we counted these and there's only like eight of them right and so i'm going to go back on over here and say that we had uh the the other account that will be impacted oftentimes we might set up an account called inventory shrinkage right if not it would go you could put it to cost of goods sold but we probably want to track a different account saying hey look these are not the items that we sold this is due to shrinkage or theft or some some other thing that went wrong and therefore we're still going to expense it as a cost of goods sold type of account but we want to track it in a separate account as cost of goods sold so we can see uh see the difference between the two and so we're going to say this was item one and then this is item one and then let's say the new quantity is only eight that oh not eighty eight that's the physical count that we had so there's the the system is showing that there's ten on hand and we're saying well no there's only eight there's only eight on hand so the change is two that means two need to be written off so what is this going to do this will actually record a journal entry because it's going to those two represent a dollar amount of in our case they were a hundred each two hundred dollars so you would think that inventory has to go down by you know the two hundred dollars and we got to record the other side somewhere it's going to go to the income statement we could put it to cost of goods sold but we probably want to create this other account which is a cost of goods sold type of account called shrinkage or something like that uh to show the to show the difference between a sale and the expense as a result of theft or whatever or spoilage or whatever so let's save it and close it and then if i go to my balance sheet and we run this again we can say okay now if i go into my inventory uh closing this out we're going to say the inventory uh that i had to refresh the screen again but here it is so here's the quantity there's the the two hundred that's being decreased and you can see the transaction type is an inventory quantity adjustment normally when you see a decrease you would think it would be a sale which would be an invoice or sales receipt but this time it was an adjustment for the shrinkage form if i go into that we're going to say there it is there's my inventory quantity adjustment so it is showing uh as a type of form so there it is previous adjustments and so on if i close this back out and go back the other side should be on the income statement tapping to the right and running it so we put it into the shrinkage uh which is a cost a good sold so there's the cost a good sold we put it under the same category of cost a good sold but it's the shrinkage so it's still an expense because we bought the inventory and we were we needed to do that to get to to process for our business purposes and we have to deal with with theft and spoilage and that kind of stuff so it's still an expense but we put it in in a different account then cost to get sold although cost of a good sold type of account is where we put it and then on the sub ledger report then we have the shrinkage brings the inventory count down to eight now which means we have 800 dollars 100 each times eight 800 that gives us a total of 139 625 which should tie out to the balance sheet 139 625 so the bottom line if i go back to the first tab for the for the inventory quantity adjustment it's only going to be used if you have inventory and even then it will only be used if you're tracking the inventory within quickbooks on a perpetual inventory system meaning the inventory is going up when you make the purchase of it with a bill or expense form and going down every time you sell it with an invoice or the sales receipt instead of tracking it on a periodic inventory system such as you might track it and excel outside uh and and then and then you and then you'd have to do those adjustments uh periodically as you do your periodic basically adjustments into the system when you're doing a perpetual inventory system you still need to do a physical count even though it's tracking inventory real time because of things like errors things like shrinkage things things like spoilage which means that obviously if the system says there's 10 units of inventory and you counted only eight units of inventory who are we going to trust we're going to trust our eyeballs right we counted eight units of inventory we have to fix the system what happened to the other two units i don't know they got lost someone stole them shrinkage spoilage whatever happened but we have to adjust the physical count down to the physical reality and we do that with the inventory quantity adjustment