How to record Shopify inventory in QuickBooks Online-Journal entry method
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- čas přidán 19. 05. 2020
- You asked for it - I'll show you how to use a journal entry to record or adjust your Shopify inventory balance in QuickBooks Online.
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I’m so happy I found your videos! They are so clear and are explained so well!
Thank you Amy. Glad you like them!
Your videos are terrific! Thank you so much
Thanks for watching, Erin!
Very helpful, thank you so much!
You're welcome.
Always great content shared in simple easy way
Glad you think so!
Your videos are wonderful. I love how you get straight to the point and make the information so clear and easy to understand. Could I still get a copy of your inventory tracking spreadsheet? Thanks!
Hi Erica. I'm a huge introvert and don't have the energy to talk for long periods of time. That's why my videos are short and to the point! I just focus on getting to the main points.
The link to the inventory tracking spreadsheet should be listed in the description for this video. Let me know if you can't find it.
@@5MinuteBookkeeping Thank you so very much!
Hi, thanks for this tutorial. Would like to ask how'd you compute or get the value of Shopify ending inventory that will be recorded/adjusted in Quickbooks? I think the month-end reports that can be downloaded in Shopify only shows the quantity. Thanks.
Hi Vivian, after I did this video, Shopify released their new inventory report. You can use their report to get the amount of the inventory. I have a video coming soon showing this process.
Thank you so much for your videos, they are very helpful! I happen to be the person who wants to use QBO to track item by item, but I am slowly changing my mind and using a spreadsheet instead. (I just started 6 months ago) 2 questions- 1- if you have integrated bank accounts, would classifying the receipt as an inventory be the same as a journal entry? same with receiving the payment at the end of the month through square or whatever could be classified as COGS? 2- What would be the point of having QBO pro if not for the inventory feature? Should I downgrade if I'm tracking inventory elsewhere?
1) I don't understand your question. What kind of receipt would you be classifying (there are many ways in which the word "receipt" can be interpreted for bookkeeping purposes. Such as a paper receipt, a receipt of inventory, etc).
You can record payments for inventory to either the Inventory or the Cost of Goods Sold account.
2) I believe you mean QBO Plus. There is no need to use the Plus version if you're not going to use the inventory functionality. You can downgrade your subscription.
Hello! I am trying to find the correct way to enter a JE to clean up past inventory that was mapped over incorrectly from Shopify. Ideally, I would like to enter a JE for the entire YTD overwriting the old incorrect information with the accurate data from shopify reports. Do you have a video on this? Thank you SO much for your videos! You have saved me so many times!!
Hi Amanda. I don't have a video on that. Keep in mind that depending on how inventory was initially entered to QBO from Shopify, you can only use a JE to clean up inventory if inventory was initially added via JE. If inventory is being entered using items on the products & services list, then you would have to enter inventory adjustments to fix the inventory balances. You may find videos on inventory on Hector Garcia CPA's channel.
Thanks for your video! At minute 5:23, how did you decide to use the "Inventory" account instead of the "Inventory Asset" account that also appeared? What is the difference between those two accounts you showed?
The "Inventory" account is set up in the chart of accounts as an "Other Current Assets" type account. The "Inventory Asset" account is set up as an "Inventory" type account, which should not be used in QBO unless you are tracking individual inventory items.
Thanks for the video! If a client has inventory at the start of the year ex. 01/01/21, would you just create a journal entry with the date as the start of the month? The video mentions it assumes no prior inventory balances. Thanks!
Yes, Holly. You would use a JE to record the beginning inventory balance.
Thank you for another helpful video! I will be managing a new client's Shopify store in QBO and would like to handle the inventory per your recommendations - through Excel for now. May I please get a copy of your inventory tracking spreadsheet? Thank you!
Hi Carrie. I believe I shared the link in the video description. Let me know if I did not.
@@5MinuteBookkeeping Thank you for your reply. I double-checked through reviewing the video description and the Shopify Bookkeeping Blueprint and do not see an inventory tracking spreadsheet.
Hi Veronica, I'm new to bookkeeping and I have started a business. I've gotten ProAdvisor and currently working on Advanced. I'm looking to get your program soon, just wondering if your program will be beneficial for me being that my bookkeeping experience and knowledge is mostly QB related?
Hi Thomas. If you're referring to The Virtual Bookkeeper's Roadmap - absolutely. It's all about Virtual Bookkeeping workflows and focuses on QBO. Let me know if you have other questions.
Hi. You referred me to this video from another where i stated my ebay sales werent being tracked in qbo. So i now understand the journal entry, but what if I do prefer to track the inventory item by item? I already sold the multiple items on ebay, but its not reflected in qbo. Did i miss something? If i do a journal entry it dosent specify what i sold? Unless I do one for each item, and wouldnt i still have to do an inventory adjustment for those items?
If you would like to track inventory on an item by item basis you would need to use an integrator app like Webgility or possibly Synder to sync over individual transactions in QBO. This may work if you don't have a high volume of transactions.
Please guide what USA taxes are applied to non resident operating Amazon store in USA through LLC
Hi. I don't specialize in income taxes or taxes for US non-residents.
Thanks for the video! One question: If you're always holding inventory, and you always credit COGS in the amount you debit new inventory additions, won't this result in your COGS always showing a credit? And, in the case where you sell all your inventory and convert it to COGS, the -10,000 initial credit and +10,000 in debits over time would cancel out. Wouldn't this then result in COGS showing a net zero total under Expenses? How could P&L still work properly? Thanks!
When you purchase inventory, you only debit or increase inventory. You do not credit COGS.
I have a question, If we record our purchases directly to COGS expense account , then how this JE will work because we have already recorded all the purchase to expense account?
I show in the video that if you adjust inventory, you will also adjust COGS since you have to enter debits and credits. The journal entry works whether you enter purchases to Inventory or to COGS.
If I have my invoices/charges from my vendor synced with QBO to my credit card account, I accept those charges and tag them to cost of goods sold. If I make this journal entry, will I then cancel out the cost of goods sold that were added from my accepted credit card charges, therefore having an inaccurate cost of goods sold total?
Hi. Every entry in accounting has 2 sides. If you adjust inventory, then you must also adjust cost of goods sold.
If you categorized everything to cost of goods sold, then you may have a balance in inventory at the end of the month that was not sold. That means that you would need to adjust inventory by decreasing inventory and decreasing cost of goods sold.
Hi Veronica, in your Shopify Bookkeeping blueprint, you have the Inventory Account as (Account Type: other current assets, Detail Type: other current assets). however, in the video you have Inventory as (Account Type: other current assets, Detail Type: Inventory). So, the detail type changed here. Is this supposed to be the same account we create with the blueprint or this inventory account is something else here? Thank you so much for your videos. They have been magically helpful!
Hi Aline. Thanks for catching that. You can use Detail Type: Other current assets. The Detail type doesn't affect anything in QBO.
Hi Veronica. Where do we request the inventory tracking spreadsheet?
Here is the link veronicawasek.ck.page/year-end-inventory
What do you mean when you say this works weather you record the product purchases to the inventory account or the cost of goods account? I thought product purchases are always cogs when you’re adjusting inventory with a journal entry each month.
It works either way. You would adjust the ending inventory balance to the actual amount. For example, if you need to Increase inventory you will Debit inventory and Credit Cost of Goods Sold.
How would you track the inventories' shipping/freight charges and import duties and tax?
That's a bigger conversation to assess whether inventory cost should include additional costs.
5 Minute Bookkeeping Sounds like new video potential.
5 Minute Bookkeeping Was wondering since I noticed a separate category under COGS for shipping/freight.
@@rodan233 It depends on the business and their specific needs.
I did not see the link for the excel spreadsheet
Sorry about that. You can find the link in the description for this video czcams.com/video/gjGdDgv0O-I/video.html
at 7:21 Inventory vs Cost of Goods SOld - I think you got the increase and decrease wrong. Cost of Goods Sold is on the opposite side of the equation so if you decrease (CREDIT) inventory you should also decrease (DEBIT) Cost of Goods Sold. ASSET side, the CREDIT is - decrease while the other side DEBIT is also - decrease.
A debit to Cost of Goods Sold increases Cost of Goods Sold. A Credit to Cost of Goods Sold decreases Cost of Goods Sold.
Question...why wouldnt the first journal entry be:
Debit Inventory 10000
Credit Cash 10000
dont you only use COGS as you sell your inventory...for example:
you sell 2500 of inventory and then you:
Debit COGS 2500
Credit Inventory 2500
Why would you ever set your COGS account into a negative BY INITIALLY CREDITING COGS BY 10000 INTO AN NON-NORMAL BALANCE.
Adam,
The purpose of this video is to show how to adjust month-end inventory for Shopify sellers. Throughout the month, inventory purchases would be recorded to COGS (or inventory) depending on the specific workflow. COGS would not end up with a negative balance if things are being tracking things properly.
E-commerce is very different and tracking inventory in QBO for Shopify sellers is quite challenging.
@@5MinuteBookkeeping I'm with Adam on this. That makes no sense whether or not E-commerce is challenging. The initial purchase of inventory should credit cash, and even if you have to make manual adjustments to inventory to show decreases from prior balance, you should debit COGS and credit inventory asset. Because if you credit COGS for the full inventory balance and don't sell all of the inventory, then you are left with a credit balance of COGS that would incorrectly net with the debit COGS balance.
@@ashtonedwards2389 Thanks for your comment. The purpose of this video is to give a basic explanation to e-commerce sellers who don't understand accounting or debits and credits and who also don't understand that there are two sides for every transaction. As a CPA, I fully understand that there are many ways to track and adjust inventory and of course you would never want to have a credit balance in COGS or in Inventory.
I was just about to ask this same question, Adam. In this video, Veronica says to assume no prior inventory set up in the books.
No inventory means no sales. I wouldn’t start off with a credit of $10k in COGS on day 1 since I haven’t sold anything. Cash is the best option.
After that first month was complete, I would multiply my sales x cost I paid for each SKU and debit that $ from COGS.
BTW, Veronica, thanks for all these videos! I am enjoying your “Unlock Your Financials: How to Read and Analyze Financial Statements” on courses.5MBacademy.com -Thank you!