If Amazon loses inventory, then you can account for it with a $0 vendor credit. This is likely more common if you sell through Amazon FBA. Vendor credits will also affect your inventory asset and cost of goods sold accounts.
There are several reasons why you’d use this, but common reasons include lost, damaged, or defective inventory. Use vendor credits for $0 to remove inventoryĪs the name suggests, these documents are related to vendor issues. Note that since the item is sellable (returned in new condition), all the affected accounts are back to their original values. If that’s the case, you can use a credit memo for $0 to offset the sales receipt for $0 that you created previously to write off the item.Ĭredit memos will use the COGS from the last bill that you entered unless you enter a value.īelow, you can see the exact transaction described above. On day 70, when you receive the item to inspect, it may still be sellable. Meanwhile, you may have created an invoice for the sale, a refund, and a sales receipt for the loss of the item. This process may take even longer during the holidays because of extended returns. That’s because customers have 30 days to request a refund, another 30 days to return it, and then there’s the delay for removal orders. For instance, if you sell through FBA, then it can sometimes take more than 60 days for a return to get back to you. Like sales receipts, credit memos are related to customer issues.Īmazon sellers are more likely to use this because of the delay between a refund and a return. Whereas the sales receipt will reduce the inventory accounts, a credit memo will increase your inventory quantity and accounts. Here’s an example of a report on the product with a $0 sales receipt and the affected accounts. When you look at your balance sheet or run a profit and loss report, your accounts will be correct. This will adjust the COGS and Inventory Asset accounts.
One option to handle customer-related issues to reduce inventory is to create a sales receipt for $0.
Or they issue a free replacement to the customer. Some sellers will just throw out or destroy damaged returns. When you create a refund in QuickBooks Online, inventory will increase by the quantity on the refund document. See below for a product report showing the inventory quantity adjustment and the changes to the accounts:
This will affect your profit and loss reports accordingly. Since QuickBooks Online uses FIFO accounting, the COGS is based on the date of the transaction and the last bill entered. Make sure you enter a reason for the adjustment in the Memo field so that you can always refer back to it later. 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. Using inventory adjustments is a quick way to record changes in inventory.
You can create an inventory quantity adjustment document found under the Plus icon > Other. These options aren’t necessarily limited to the situations described. We’ll go through some different options, and you can decide what works best for your business. Handling a return of a damaged product is going to be different from handling damaged inventory that your supplier refunded. How you manage adjustments will depend on what has happened. Documents that affect inventoryĭepending on how you manage your inventory in QuickBooks Online, there are going to be multiple ways you can handle your inventory adjustments. We won’t cover sales and refunds since those are straightforward. Some cases include damaged returns, lost inventory, or other shrinkage. This article will go over ways sellers can properly adjust inventory using QuickBooks Online documents for $0. By using the right documents, your reporting will be more correct and you can make more informed decisions.įailing to accurately track your documents can lead to issues with order fulfillment and unhappy customers, amongst other issues. Tracking your inventory with the proper documents can give you more detail about your business.
Learn how to properly adjust your inventory for failed returns or lost inventory in QuickBooks Online using the correct documents.