Quickbook / Basic Accounting and stock "draw down"

I know this is probably one for the accountant but more curious.

Using Quickbooks to import all transactions from the bank, when matching up paying suppliers for stock, it obviously deducts the bank / cash account and credits the stock account. However, this means at the end of the year the full stock amount is still on the balance sheet. How do I "draw down" the stock as it sells?

DaveJoyce

Along with a Purchase Nominal you give your Stock a Sales Nominal, this then leads to to the following

• Buy inventory. You buy €1,000 of goods with the intention of later selling them to a third party. The entry is a debit to the inventory (asset) account and a credit to the cash\bank (asset) account. In this case, you are swapping one asset (cash) for another asset (inventory).
• Sell inventory. You sell the goods to a buyer for €1,500. There are two entries in this situation. One is a debit to the accounts receivable account for €1,500 and a credit to the revenue account for €1,500. This means that you are recording revenue while also recording an asset (accounts receivable) which represents the amount that the customer now owes you. The second entry is a €1,000 debit to the cost of goods sold (expense) account and a credit in the same amount to the inventory (asset) account (or what ever sales account you assigned to the inventory). This records the elimination of the inventory asset as we charge it to expense. When netted together, the cost of goods sold of €1,000 and the revenue of €1,500 result in a profit of €500.

Hope that helps

Thanks for the reply - I can't see those fields on my Quickbooks, perhaps I need to upgrade.

I followed the answer on https://quickbooks.intuit.com/learn-support/popular-reports-accounting/qb-desktop-how-to-record-inventory-adjustment/ta-p/992430

Since you are not using QB inventory, you must use the periodic inventory method. There are two ways to do periodic inventory, choose one and stick with it, you can not mix and match

1. Create an asset account called purchases and post all purchases of item for resale to that account. Periodically, weekly, monthly, etc value the inventory on hand, subtract that value from the amount shown in the purchases account and do a journal entry for the answer to the subtraction

debit COGS for that value

credit purchases for that value

OR

2. Post all purchases to COGS. Periodically, but at least at the end of the year, you value the inventory on hand and do a journal entry.

debit the asset purchases account for that value

credit COGS for that value

DaveJoyce

Are you using QuickBooks Online or Desktop?

If you are aren't using the inventory side, then yea you would need to follow that question

If you are running an inventory based business it is best to have some inventory tracking in place, even to make sure Margins, and ABC analysis are been tracked