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Subject Author Date
Inventory Puzzlement Arrice2 12-28-2006
Posted by Arrice2 on December 28, 2006, 7:53 pm
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 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



Posted by HeyBub on December 28, 2006, 8:37 pm
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 Arrice2 wrote:
> 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.

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.



Posted by Arrice2 on December 29, 2006, 12:37 pm
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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 <319,000>.


--
Carolyn
> Arrice2 wrote:
>> 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.
>
> 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.
>



Posted by HeyBub on December 29, 2006, 8:23 pm
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Arrice2 wrote:
> 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 <319,000>.
>

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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