... QuickBooks Farm Accounting. Use the Adjustment Account drop-down list to identify the expense account that you want to use to track your inventory shrinkage expense. The Inventory Adjustment account is debited for $25,000. QuickBooks tracks inventory well when set up correctly and proper procedures are followed consistently for buying, selling and adjusting the inventory item balances. This year, Widgets, Inc. had a debit balance of $325,000 in the Purchases account. Use the Adjustment Date box to record the date of your physical count. If you set up your adjustment screen like this example: You will be both increasing and decreasing the value of your inventory asset account for the value of these 605 items that are being adjusted. One Time Setup Steps To adjust accounts by both Item and account, you need to add two new Accounts, two new Items and one new Customer as shown below: Step 1. The three accounts set up are COGS, Merchandise Sales and Inventory. When you create a new custom stock adjustment reason, you can also choose to link up the inventory adjustment account. When using the periodic method, balance in the inventory account can be changed to the ending inventory's cost by recording an adjusting entry. QuickBooks will force the user to select an offset account when adjusting inventory using this window under the vendor dropdown or Vendor Center. The premise behind this is properly setting up inventory versus non-inventory types. You may make adjustments to your QuickBooks inventory system to account for sales you make to customers, new inventory purchases and changes to the value of your merchandise. Both Profit & Loss and Balance Sheet accounts are affected by inventory adjustments. Adjust Inventory in QuickBooks Desktop Pro: Overview When you have loss, spoilage, or send out samples of your products, you need to manually adjust inventory in QuickBooks Desktop Pro. When you create an inventory quantity adjustment document, QuickBooks Online will automatically post the loss (or gain) to a “Cost of Goods Sold – Inventory Shrinkage” account. In QuickBooks, while the Adjust Quantity/Value on Hand window is selected, you can press Ctrl + Y to display the Transaction Journal of the debits and credits entered. Select Inventory Adjustment from the Transaction Type list; You can add multiple filters. Below shows a stock adjustment created with the reason ‘Damaged Goods’. . For example, you can select the Date filter and select a date range. Adding the debit amount in the Inventory Adjustment to the debit amount in Purchases produces a COGS value of $350,000. To illustrate, let's assume that the cost of a company's beginning inventory (last year's ending inventory) was $35,000. Note: The “Materials Income” account is linked to the “Counters” Item (a Non‐Inventory Part Item). For positive adjustments, the debits and credits are reversed. In other words, you want to adjust your quantities as of the day you took or completed the physical inventory count. $325,000 + $25,000 = $350,000. Do you know what has caused this to happen. Then set up the stock adjustment reasoning to send to a designated account in QuickBooks Online (QBO) integration Settings page within QuickBooks Commerce. × Make sure you enter a reason for the adjustment in the Memo field so that you can always refer back to it later. To adjust inventory in QuickBooks Desktop Pro, you use the “Adjust Quantity/Value on Hand” window. The POS Inventory Adjustment account is normally what’s used when you adjust inventory – either by changing the on-hand quantity or average cost in the item or adjusting quantity or cost in the Inventory dropdown menu. Enter ‘Inventory Asset’ into the adjustment field on the ‘Adjust Quantity/Value On Hand’ transaction. Examples of Adjusting the Inventory Account. 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