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how to adjust inventory quantity in QuickBooks hey there everyone this is Matt Holquist with the QuickBooks University I wanted to show you how to adjust the quantity of inventory you have showing in QuickBooks now even more important what I want to show you is what it does so when you make an adjustment to inventory it's going to affect some other part of QuickBooks okay and I'm going to show you what that part generally is and we'll get to that in just a second so one important thing that you want to do when you have inventory and you're using QuickBooks is you want to do a physical count periodically typically most companies will do a physical count either monthly or quarterly some just do it annually it does take some time depending on how much inventory you have depending on how much staff you have but you want to do these counts periodically that way you can go in and adjust the quantity in QuickBooks because sometimes things happen you know you might input the wrong quantity you may have counted wrong when your vendor shipped you the inventory and you put in the wrong amount somebody might take some inventory who knows there's going to be some kind of waste and so there those counts are going to get off all right so here we are on the home screen of QuickBooks desktop and what you're going to do is go to vendors and then you're going to go down to inventory activities and adjust quantity value on hand all right so it comes to this value screen or this quantity and value screen and where we adjust it you're going to see here adjustment type quantity or total value all right so we're talking about the quantity in this case all right so we're going to say the quantity the date is going to be the date that you're going to adjust this as of so let's say that it's 12 31 so we're at the end of the year The Adjustment account is generally going to be cost of goods sold all right because inventory directly affects cost goods sold so it you know when you buy it it's inventory and then you sell it it turns in the cost gets sold and goes on your profit and loss statement so in general it's going to be cost to get sold now you may have another cost of goods sold account you know that you're going to set up here you know some people will set up a separate account that is inventory adjustment account um some people just put it to cost to get sold we're going to put it to cost of goods sold now over here we're going to find and select the items this is going to be the easiest way to do it you can go line by line and pick things but this will be the easiest way is to just go through and say okay here are the quantities I have we're going to say that we need to adjust the cabinet poles the light Pine the brass hinges and the overhead door okay so we know that we need to adjust these so we're going to click here and say add selected items you can see here it pulls all these up it's got the description and the quantity on hand right here is where you're going to type in the new quantity so if we if you go to do your count and you say Okay cabinet poles we actually only have 415 you just type in the new 100 415. now you'll notice down here that it says total value of adjustment negative 20.47 now what that is based on is the item so when you set up the inventory item and you have a cost in there that is where that number is coming from so you're saying we are reducing it by eight times the cost gives you 20.47 now this is going to be when you reduce the inventory quantity that you have on hand this is going to increase your cost to get sold and I'll show you that here in just a minute with an example and and that's because if it's truly 4 15 then that cost has to go somewhere okay so the natural place is going to be cost of goods sold so let's say that our cabinets like Pine we only have four uh and then Hardware brass hinges in this case let's say that we have uh 252 so that was more and now when you have more that is going to decrease cost of goods sold okay because the assumption is okay too many were taken out of inventory put in cost goods sold so now we're going to take it back out all right so you need to understand when you do an adjustment up or down what it's going to do to your profit and loss statement so then overhead door we're going to say that we have nine of those instead of 10. all right so you see here the total value of adjustment one a negative one thousand five hundred fifty five dollars and fourteen cents that is the cost of all of these items going up and then the other three going down so that's it's as simple as that when you do it but here's the effect so we're going to save and close and you'll notice I didn't put anything to customer job or class you can fill those in if you need to generally I'm not sure of when you would apply it to a customer but of course you can if you have certain inventory just for a customer okay so now we're going to go to our profit and loss so let's go to reports let's go to profit and loss standard and we want to make sure that the date range goes to 1231 all right let's update that and we want to go down to cost of goods sold so you can see here cost of goods sold 6103 and you can see our adjustment here it was a negative on the other screen because that means that we are reducing the inventory cost and we are increasing cost of goods sold so you can see this inventory adjustment one thousand five hundred and fifty five dollars and if I click on this it's going to take me back to this screen now that is the profit and loss statement so now if we go to the balance sheet all right so I go to a company in financial I go down to balance sheet standard I make sure that it's through December 31st because that was the date of the adjustment if we go to inventory let's find inventory on this balance sheet here it is inventory asset okay and let's see inventory adjustment 1573 let me go back just a couple days okay so these are the adjustments here and it looks a little strange because you've got 1573 so it's reducing inventory and then 18 which was the brass hinges which is increase in inventory so the net of those two is the total adjustment I think it was 1855. all right so that is the total adjustment so you can see it reduces or increases the asset on the balance sheet but it also increases or reduces cost of goods sold depending on the direction of your adjustment but those are the basics of how to adjust inventory quantity in QuickBooks if you have any questions any comments please feel free to leave those below and I'll see you in the next video