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Negative Inventory Issues In QuickBooks Desktop

QuickBooks Tip: How To Prevent Negative Inventory

QuickBooks has several useful tools, including a feature which allows users to track the number of inventory on hand. However, one universal problem users come across with this particular feature is an inventory value going negative.

Negative Inventory Issues In QuickBooks Desktop is caused when sales transactions are entered prior to the corresponding purchase transactions are entered therefore the results could be an actual headache. 

Potential issues include incorrect cost of goods sold balances, errors on vendor reports, and “out of balance” balance sheets. If any of these issues sound familiar, this is the time to learn more about how you can easily fix or avoid negative inventory altogether.


Fixing negative inventory

When you are with a poor inventory situation, don’t panic. Utilize the following suggestions to help correct it.

  • Edit dates: If it reflects the flow of one's products, you can adjust transaction dates making sure that vendor bills are dated before customer invoices.
  • Select reports > inventory > inventory valuation detail.
  • Change the are accountable to show all dates.
  • Look through the report for items showing a negative amount in the on-hand.
  • Adjust the dates so that the bill dates are prior to the invoice dates.
  • Continue doing this process for every item with an adverse quantity in the on-hand.

While trying to correct negative inventory, take necessary precautions to avoid potential problems. For instance, back up your data and ensure that it it is safe. Recognize that you need to eliminate each occurrence separately.  It is impossible to shortcut this remedy. Before you do anything, touch base with your accountant to ensure that the changes you might be making are valid.  

You may also read: https://accountinpro.blogspot.com/2020/12/negative-inventory-issues-in-quickbooks.html
Preventing negative inventory

You can avoid this example by only recording the sale of inventory items once you've purchased them and entered the purchases into QuickBooks.

The following guidelines can help with this procedure:

  • Put up inventory items with an opening balance – When creating a brand new inventory item, you can easily enter the quantity on hand and value to ascertain the average cost. If there aren't any units on hand, enter a purchase before entering the sale.
  • Use non-posting estimates and sales orders to trace sales for which you do have inventory – First, enter the customer order as an estimate or sales order. Next, purchase the inventory item and go into the purchase into QuickBooks. Lastly, convert the estimate or sales order to an invoice.
  • Use pending invoices to enter sales that you do have inventory – First, enter the customer order as an invoice and then mark the invoice as pending. Second, purchase the inventory items and enter the purchase into QuickBooks. Next, mark the invoice as final. Finally, adjust the invoice date to your date on which the products are shipped to the customer.
  • Set preferences to warn you of potential problems – Under Edit > Preferences > Items & Inventory > Company Preferences, you’ll find a check box to “Warn if not enough inventory to market.” Be sure this preference is checked to receive pop-up warnings if you’re trying to invoice a person for lots more units than you have available to market.

If you want more assistance with negative inventory or just about any other issues, please contact me or any other certainly one of Kaufman Rossin’s QuickBooks ProAdvisors.
 

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