Inventory Puzzlement

Dec 29, 2006 3 Replies
A

I am trying to help a friend with her QuickBooks. She has set up many inventory parts accounts correctly as far as I can tell. The purchases are charged to COGS and the Sales are charged to a sales income account. However, when she set the items up she did not adjust the quantities on hand so many of her inventory items show a negative amount. The problem is that when she creates an invoice, the item is charged to purchases rather than sales. Is this because she has negative inventory amounts? I have used QuickBooks for 10 years and have never run into this problem.



Thanks for your help.



Carolyn


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H

Don't know, but this bothers me:

"The purchases are charged to COGS..."

You don't charge purchases to "cost of goods SOLD." The item has to be sold before anything can get charged to COGS.

When you purchase inventory, you have only a balance sheet transaction: cash for inventory.

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A

I misspoke about "charging to COGS." I meant it is set up that way on the items. The problem is that items on the invoices are showing up under purchases. The inventory asset account balance is .

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H

Ah, well the next thing to look at is whether she's actually invoicing an inventory item.

We don't sell "inventory" items inasmuch as the stuff comes in and the stuff goes out and the stuff plays Pinochle on your snout quickly enough to not really be held in inventory.

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