Techniques to Fix Incorrect COGS in QuickBooks Desktop

Incorrect COGS in QuickBooks can cause considerable problems in accounting statements and results. Users must fix this issue quickly to ensure the process and tax calculation doesn’t affect profit and loss reports. This troubleshooting guide will walk you through the ways to resolve this problem efficiently.

If you run a business that uses inventory items, sometimes, while running Profit & Loss report, you might get an incorrectly calculated Cost of Goods Sold. Even after verifying the items list, QuickBooks displays negative COGS, or the COGS amount does not appear in the reports. The following article will guide QuickBooks users to fix incorrect inventory in QuickBooks online. So if you are also wondering how to adjust COGS in QuickBooks or how to make corrections to the false COGS balance, follow the complete article until the end for detailed instructions.

Are you struggling to overcome incorrect COGS in QuickBooks? If this blog doesn’t help, you can contact the QB experts at +1- 855 738 2784 Now. The specialists will understand and assist you throughout the process until your problem gets fixed

What does Incorrect COGS in QuickBooks Entail?

Before we answer the question of what is incorrect COGS in QuickBooks, let’s understand what is cost of goods sold in QuickBooks.

Reasons QuickBooks POS Calculate Incorrect COGS

Following are the reasons that cause discrepancies in COGS amount calculated by QuickBooks Desktop Point of Sale:

1. You have entered an incorrect value of the item received.
2. Item in the inventory does not have a cost set up, and you have entered the cost of the item after it’s been sold.
3. QuickBooks Desktop POS is fetching data from an incorrect COGS account.
4. You have made adjustments in the COGS account those are not displaying in POS.
5. Somehow the transactions recorded by POS got deleted from QuickBooks Desktop.
6. You are selling your inventory items separately after purchasing them in bulk.
7. Another explanation for why is my cost of goods sold negative in QuickBooks is that before the financial exchange could be sent, the receipt got marked as sent to QuickBooks Desktop.

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Solution to Adjust COGS in QuickBooks

Here’s how to adjust cost of goods sold in QuickBooks with easy steps:

Solution 1: Verify the Cost of Item Sold is Entered Correctly

It’s crucial to ensure that items have a zero cost so that you can run an item summary report for QuickBooks POS cost:

1. From under the Reports tab click Sales and then select item Summary.
2. Click Modify and then select Revert.
3. From the Item Name section sort the items.
4. Now locate any items with $0.0 in the Ext Cost section.
5. Note down the items that do not have any cost set up.
6. From under the Inventory section, select Item List.
7. Click Edit on each item and then first check the history of the item to know how many items have been sold without a cost.
8. Calculate the total amount of the items sold without any cost.
9. Now from QuickBooks Desktop Journal Entry section, create a new journal entry that credits the amount to the COGS account and debit it from the Inventory Assets.

Note: Ensure QuickBooks cost of goods sold error doesn’t pop up in the future by receiving items on a voucher. Do not enter quantities manually as you add new items. 

What to do if you still have an on-hand Quantity for these items?

In such circumstances, take the following actions:

1. First, edit the item and then enter the correct item cost in the Average Unit Cost field.
2. Tap Save. QuickBooks Desktop will receive an adjustment after the financial exchange to enhance your inventory asset. The next time you sell the assets, it will have a cost.

If no items are found with a $0.0 value, follow the next step to adjust incorrect COGS in QuickBooks.

Solution 2: Make Sure Correct Cost of Goods Sold Account is Set up Under Settings

Ensure the cost of goods sold QuickBooks is set up under accurate settings:

1. Open QuickBooks Point of Sale and from under the File tab click preferences and select Company.
2. Click Financial and then select Accounts.
3. Verify that the Correct COGS account is selected for each item listed.

Next, verify every item’s preference as follows:

1. Now from under the Inventory section, click Item List.
2. From the Column Header, choose to Customize Columns after right-clicking it and then check if the correct Cost of Goods Account is set under it.
3. Choose the COGS Account column header to sort by the COGS account. Ensure no expected accounts remain for every listed item.

However, if the opposite is true, you’ll have to fix it as follows:

1. If you find an incorrect COGS account set up under the settings, then click the Item List and choose the correct COGS account for it.
2. Open QuickBooks Desktop and make a Journal Entry to move the amount to the right COGS account.

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Solution 3: Remove any Adjustments made with Errors in POS

Verify the Point of Sale adjustments in QuickBooks cost of goods sold for services:

1. Open QuickBooks Point of Sale and from under the Inventory section select Quantity Adjustment History.
2. Click Customize Column after right-clicking any Column Header.
3. Now add a Diff Cost in the column that is selected and then hit Save.
4. Note the quantity adjustments made by any mistakes and unexpected sums in the Diff Cost section.
5. To check the account where the funds are transferred double click an entry and then hit I want to view Financial History.
6. Choose the option that says Open in QuickBooks, then click Inventory and select Cost Adjustment History. You can inspect the cost adjustments by repeating the initial three steps in QuickBooks online cost of goods sold.
7. If you find any adjustment that was made by mistakes click I want to and then select Reverse Memo from Qty adjustment or Cost adjustment history.
8. Now create a journal entry in QuickBooks Desktop to move the fund to the correct account.

Solution 4: Check for Deleted POS Transactions in QuickBooks Desktop

Next, you need to ensure the Point of Sale Transactions were not deleted or marked as sent in QuickBooks Desktop.

1. Go to the Sales History section and click I want to.
2. Choose Show Financial Details.
3. If the Financial details show Sent to QuickBooks Successfully status, but you can’t see any Open in QuickBooks option, then it means that the entry has been deleted.
4. In case you are unable to find the receipt in QuickBooks Desktop, then select Resend this document during the next Financial Exchange option.
5. If any receipt is showing status as Not sent and Mark this document as successfully sent option is selected then un-check the Mark as sent check-box and click OK.

Solution 5: Check Items Received in Bulk are Not Sold Individually

Further, you may receive a bulk item, like gravel, as a particular quantity type (for instance, a ton) and sell it as another quantity type (like a square yard). When this happens, your cost of sales QuickBooks receives a great hit:

1. Click Items under the Inventory sections and check the items that you have purchased or entered in bulk like sand or bricks.
2. Click the option Show Details and view the History of each item.
3. If you get errors in the amount on your sales receipt, then create a journal entry in QuickBooks Desktop and enter the correct value of the item sold.
4. If you do not want to use a journal entry, you’ll need to reverse and re-enter every receipt where an incorrect quantity was added.

How to enter cost of goods sold in QuickBooks?

Here’s how to enter cost of goods sold in QuickBooks. You set up Cost of Goods Sold as an account in the Chart of Accounts. It means it is not an item in Products and Services.

So, the steps to create an account to track the inventory value are as follows:

1. Tap the Gear icon at the top, followed by the Chart of Accounts.
2. Choose New.
3. From the Account Type drop-down, opt for Current Assets.
4. Now, select other current assets, from the Detail Type drop-down menu.
5. Hit Save and Close.

Now, form an account to track your cost of goods sold as follows:

1. From the Gear icon at the top, choose Chart of Accounts.
2. Tap the + New option.
3. Now, opt for Cost of Goods Sold from the Account Type drop-down menu.
4. Select the closest type of Cost of Goods Sold, especially the one matching your situation from the Detail Type drop-down. Use Other Costs of Service- COS if you’re unsure.
5. Tap Save and Close.

If you’re trying to arrange a COGS account for an inventory item, add it to an Expense account. The steps involved in creating an item and doing so are as follows:

1. Move to Sales and opt for Products and Services.
2. Tap New.
3. Choose the preferred Product/ Service Information.
4. Enter the necessary details and ensure to select COGS under the Expense Account.
5. Hit Save and Close.

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How to Move Inventory to COGS in QuickBooks?

If you wish to learn how to move inventory to COGS in QuickBooks, keep reading this section.

If you’re setting up your inventory items as service items in QuickBooks, you may experience problems with QuickBooks COGS. The built-in inventory item setup automatically tracks the COGS account in the QB Online Plus version. You cannot switch to another account type. However, the purchasing information section on a service item would allow selecting the inventory asset account.

QB app relies on account mapping to determine when and where to track items entered in the books. For inventory items, inventory tracking will benefit. It’ll hit the inventory asset, COGS, and sales account accurately.

After turning on your inventory tracking, QuickBooks offers the option to change a service item to an inventory item. While learning how to add cost of goods sold in QuickBooks, save yourself from re-entering everything if you’re wishing to modify the item type to track inventory. The steps involved are as follows:

1. Go to the Sales section in the left menu and select products and services.
2. Tap Edit in the Action column for a service item.
3. Select the Change Type option at the top of the edit window.
4. Click Inventory.
5. Type in the necessary information regarding the Initial quantity on hand and As of date.
6. Verify other information and its accuracy.
7. Hit Save and Close.

These steps do not have a retrospective effect. So, adjustments made previously when seeing the cost of goods sold not showing in QuickBooks will not be impacted.

How to run a cost of goods sold report in QuickBooks Desktop?

Follow the below section when you wish to know how to run a cost of goods sold report in QuickBooks desktop:

Currently, you cannot run a report showing the cost of goods sold by custom tax name. However, you can run the taxable sales reports in QB. Further, if you wish to track the Cost of Goods Sold in QuickBooks Online, you need to find the Profit and Loss Report and launch the Transaction Report for the Cost of Goods Sold account in QB Online. The steps are as follows:

1. Head to the Business Overview section and opt for the reports menu.
2. Look for the Profit and Loss report and open it.
3. Alter the date range and click the Run Report option.
4. Search for the Cost of Goods Sold on the report page and choose the amount.
5. Now, review the transactions for the sold items as needed.

Why is my cost of goods sold negative in QuickBooks?

Users see a negative balance in their Cost of Goods Sold account because they use an expense account while buying an item. You can tap the COGS amount to highlight it in the transaction and drill down the report.

Next, you need to modify the item account and update past transactions. You can do so as follows:

1. Head to Settings in QuickBooks and choose Products and Services.
2. Hit Edit under the Action column of the appropriate item.
3. Now, select the correct account from the Income Account drop-down.
4. Hit the Also update this account in historical transactions checkbox.
5. Select Save and Close.

COGS usually gets affected only when you sell the items. You can’t use this account for items used to create your products, like raw materials.

Following all the steps mentioned above you can quickly fix incorrect COGS in QuickBooks Desktop Point of Sale and in case QuickBooks POS is still calculating incorrect COGS then we suggest you get in touch with one of our POS experts at +1- 855 738 2784 for help and support.

FAQs

Why do I get a negative COGS balance in QB Desktop?

Your COGS may be negative due to the following reasons:

1. If you use an item on the invoice where the COGS account is the income account
2. A negative balance may arise when you use an inventory item on a credit memo.
3. The error may arise if you use the COGS account as a credit on the journal entry.
4. Using a COGS account on the deposit may cause negative balances.

How to Correct a Negative COGS Balance in QB Desktop?

If your COGS balance is negative, you can fix the problem through the following steps:

1. Begin by producing a detailed transaction report of your COGS account (s).
2. Double-click the negative transactions to locate the problem.
3. Also, tap the Reports button at the top of the transaction and choose Transaction Journal. Check the underlying journal by pressing Ctrl + Y.
4. Now, locate amounts in the Credit column for the COGS account- debits will rise, and credits will fall with them. ‘While using items, inventory, and other QuickBooks functionalities, a direct problem may appear in one or more bills, checks, credit card charges, invoices, credit memos, journal entries, or deposits.

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Techniques to Fix Incorrect COGS in QuickBooks Desktop

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Incorrect COGS in QuickBooks Desktop can wreak havoc on overall accounting data, and thus you must immediately rectify the issue with the help of the instructions in this article.

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Accounting Helpline

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Accounting Helpline

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