Adjust Wine in Process Inventory Items in QuickBooks
Question – How Do I Get Old Corks Out Of QBFS Inventory
Hope you’re well. I have a question for you: I have some old corks in the holding account that we’re not using and are throwing away. Could you write out again how I get them out of the holding account and get rid of them
My Thoughts On The Question
One of our winery clients that uses our book “QuickBooks Point of Sale for Wineries Handbook” to help them manage their tasting room and winery operations with QuickBooks Point of Sale and QuickBooks Financial Software recently emailed me the above question. As I looked at the question I wondered why i did not include this in the QBPOS for Wineries Handbook. Sure, the books is mostly about using QBPOS to manage inventory and sales and such in the tasting room, but it also addresses the basics of tracking Wine in Process. Certainly the book will be updated as we see newer versions of the software applications and i will do my best to include it. But, for now, I wanted to at least share the answer.
As with all good questions, usually I find i have to ask another question or two to make sure i don’t go down the wrong path with my answer -and my first response to this client’s question was to make sure they were actually inventorying the corks in question in QBFS and they were. So here is the answer, but keep in mind it does not pertain to only corks. This could be relevant for all kinds of wine in process items that might be inventoried and then disposed of at some point.
Answer – We Will Want To Do An Inventory Adjustment
A Bit About How We Track Wine in Process First
Without going into great detail, it is important for us to track what it costs to make a bottle of wine. After all, there are all kinds of issues relative to knowing what those costs are. Some costs can be directly associated with a specific bottle of wine to be made and we can capture them in the appropriate asset account to track those costs at the time of purchase. In other cases, we may find that we by items in bulk and then use them up across variety of wines being made. Therefore we need to be able to track the costs of those items and transfer that cost to the appropriate account at the appropriate time. Here you can see that we are actually tracking the value of our unused corks as an inventory asset we call “Cork Holding” on our balance sheet.
Now if we take a look at the underlying inventory in QBFS, we can see that our corks tie to the value on the balance sheet and how many we have in stock of each king as well as their cost.
In order to deplete these corks from inventory and expense their value, we will need to make an inventory adjustment in QBFS. To do so, go to inventory on the main menu and choose Adjust Quantity/Value on Hand.
Next, set the adjustment type to Quantity and Total Value. The date will be the date you disposed of the asset. You will either select and adjustment account from your existing chart of account that makes sense or you may need to create a new one. We have an account we call WIP Spoilage that we like to use. If you are using job costing or class tracking you will complete those fields as appropriate. Here you can see we have selected the corks we which to dispose of and we currently have a qty on hand of 1060.
Next we need to set the new quantity to the correct level – perhaps of the 1060 left on hand, you really only want to get rid of 60 that are really old. If so, then in the new quantity field, enter 1000. If you look at lower portion of the adjustment, you will see that we are disposing of 60 corks with a value of $17.40. Save an close the document
If we now review our balance sheet value at the top of the page you will that our Cork Holding account has been depleted by $17.40 (from $2257.40 to $2240.00) and the Wip Spoilage account on the P&L is reporting that value as spoilage.