Comments on: Letting Inventory Levels Go Negative Results In Unreliable Numbers http://www.qbgarage.com/general/negative-quantity/ The QuickBooks© Tune Up & Reporting Specialists Sat, 10 Apr 2010 19:47:33 +0000 hourly 1 http://wordpress.org/?v=3.0 By: Heather http://www.qbgarage.com/general/negative-quantity/comment-page-1/#comment-52 Heather Thu, 28 Jan 2010 16:36:58 +0000 http://www.qbgarage.com/?p=12#comment-52 I hate to admit this but we have been running negative inventory numbers for 4 years with QB. We are just now deciding to track inventory tied to customer orders. Any ideas on how to delete current inventory levels completely and start fresh. I hate to admit this but we have been running negative inventory numbers for 4 years with QB. We are just now deciding to track inventory tied to customer orders. Any ideas on how to delete current inventory levels completely and start fresh.

]]> By: Rick http://www.qbgarage.com/general/negative-quantity/comment-page-1/#comment-49 Rick Wed, 05 Aug 2009 18:39:07 +0000 http://www.qbgarage.com/?p=12#comment-49 Wouldn't there be an opposite issue doing this the other way as well though? If you already have 5 of the 10 items in stock and then you buy 5 more at a higher price the system would think that all 10 were bought at the higher price at the time of the invoice by waiting to create it right? So in fact you would be making more profit than the reports state. 10 @ $7.50 = $75.00 when in reality the actual COGS is 5 @ $5 and 5 @ $7.50 = $62.50 That's a difference of $12.50 that actually went into your pocket. Wouldn’t there be an opposite issue doing this the other way as well though? If you already have 5 of the 10 items in stock and then you buy 5 more at a higher price the system would think that all 10 were bought at the higher price at the time of the invoice by waiting to create it right? So in fact you would be making more profit than the reports state.

10 @ $7.50 = $75.00
when in reality the actual COGS is
5 @ $5 and 5 @ $7.50 = $62.50

That’s a difference of $12.50 that actually went into your pocket.

]]> By: Preet http://www.qbgarage.com/general/negative-quantity/comment-page-1/#comment-38 Preet Fri, 13 Feb 2009 22:28:40 +0000 http://www.qbgarage.com/?p=12#comment-38 Your notes are extremly detailed and helpful. Thank you. We have always done physical inventory count at the end of the year, but never adjust the value. Which lead to difference in amounts between Inventory Asset and inventory value. Your notes are extremly detailed and helpful. Thank you. We have always done physical inventory count at the end of the year, but never adjust the value. Which lead to difference in amounts between Inventory Asset and inventory value.

]]> By: Chief Mechanic http://www.qbgarage.com/general/negative-quantity/comment-page-1/#comment-24 Chief Mechanic Sun, 04 Jan 2009 17:47:30 +0000 http://www.qbgarage.com/?p=12#comment-24 Tracy, unfortunately, there’s no “one solution fits all” cure, and some of the cures would occupy entire articles on their own. The first step is to do a physical inventory and compare that to your QuickBooks inventory so you can identify the number of items with negative inventory. Then, try to get a sense of how frequently those items went negative by running reports with different date ranges. The number of problem items and the frequency with which they went negative will influence how you should proceed. Here’s a brief outline of several methods. If both the number of negative inventory items and the number of instances they went negative are small, you can identify the vendor receipts and change the dates on those transactions to a date before your customer invoices. Generally speaking, this is the Intuit-recommended solution, but it has these drawbacks: if you change the dates on vendor receipts/bills, you’ll be changing your AP due dates and your financial statements. You may not want to do that. Also, this approach may simply be impractical if the number of affected items or transactions is large. You’ll need to re-run inventory reports to make sure that fixed the problem. The second approach involves adjusting the quantity and value of each inventory item so that your physical count matches your QuickBooks valuation inventory report. Make any necessary quantity adjustments, and record any $ amounts as value adjustments. It’s a good idea to record these transactions in a new GL expense account (something like “2008 EOY inventory cleanup”) so you can track the impact of what you’re doing. When you’re done, re-run your inventory valuation report and make sure your inventory balance sheet account matches the total shown on the valuation report. As we discussed in the article, letting inventory go negative affects your cost of goods sold. The drawback to this approach is you’re recording a fix for that in the current year (when you do the physical inventory & make your adjustments) when the impact was over a longer period of time. If you had so many items go negative that you ruled out the first approach, your prior period net income may be off, and depending on the frequency of the transactions and the $ amounts, the discrepancy may be material. There are other approaches that blend these 2 in different degrees, or we can run cleanup software that fixes the negative quantities and revises the expenses as well as an automated approach reasonably can. If you need more help deciding which method is best suited to your business, let us know. Tracy, unfortunately, there’s no “one solution fits all” cure, and some of the cures would occupy entire articles on their own. The first step is to do a physical inventory and compare that to your QuickBooks inventory so you can identify the number of items with negative inventory. Then, try to get a sense of how frequently those items went negative by running reports with different date ranges. The number of problem items and the frequency with which they went negative will influence how you should proceed. Here’s a brief outline of several methods.

If both the number of negative inventory items and the number of instances they went negative are small, you can identify the vendor receipts and change the dates on those transactions to a date before your customer invoices. Generally speaking, this is the Intuit-recommended solution, but it has these drawbacks: if you change the dates on vendor receipts/bills, you’ll be changing your AP due dates and your financial statements. You may not want to do that. Also, this approach may simply be impractical if the number of affected items or transactions is large. You’ll need to re-run inventory reports to make sure that fixed the problem.

The second approach involves adjusting the quantity and value of each inventory item so that your physical count matches your QuickBooks valuation inventory report. Make any necessary quantity adjustments, and record any $ amounts as value adjustments. It’s a good idea to record these transactions in a new GL expense account (something like “2008 EOY inventory cleanup”) so you can track the impact of what you’re doing. When you’re done, re-run your inventory valuation report and make sure your inventory balance sheet account matches the total shown on the valuation report. As we discussed in the article, letting inventory go negative affects your cost of goods sold. The drawback to this approach is you’re recording a fix for that in the current year (when you do the physical inventory & make your adjustments) when the impact was over a longer period of time. If you had so many items go negative that you ruled out the first approach, your prior period net income may be off, and depending on the frequency of the transactions and the $ amounts, the discrepancy may be material.

There are other approaches that blend these 2 in different degrees, or we can run cleanup software that fixes the negative quantities and revises the expenses as well as an automated approach reasonably can. If you need more help deciding which method is best suited to your business, let us know.

]]> By: Tracy http://www.qbgarage.com/general/negative-quantity/comment-page-1/#comment-23 Tracy Sun, 04 Jan 2009 08:42:47 +0000 http://www.qbgarage.com/?p=12#comment-23 How do I reverse this then? How do I reverse this then?

]]> By: jim http://www.qbgarage.com/general/negative-quantity/comment-page-1/#comment-6 jim Fri, 03 Oct 2008 04:38:29 +0000 http://www.qbgarage.com/?p=12#comment-6 I really like what I see so far. Keep it up. I really like what I see so far. Keep it up.

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