V9 - Adjustment transaction interaction
An adjustment in SOS Inventory is used to increase or decrease your inventory quantities and values in SOS Inventory. An adjustment created in SOS Inventory will create a journal entry in QuickBooks that affects the asset account(s) of the item(s) on the adjustment and the account selected on the adjustment. This is normally the Default adjustment account setting listed in the Inventory accounts settings (Tools & setting > Configuration > Inventory > Accounts).
As noted in Adjustments, the value of an item depends on whether you are decreasing or increasing its value:
- If decreasing value, it is based on your valuation method.
- If increasing value, it is based on the item's purchase cost.
An example of how an adjustment in SOS is handled in the system is shown below.
Adjustment transaction ADJ2025-865 decreases the quantity of Aurora Natural Spinel Ring in inventory by 1 unit. SOS Inventory calculates the value of the decrease using the valuation method for that item. In this case, a value of $700 is being removed from assets.
SOS will post the decrease as a credit to the Inventory asset account of the item. The offsetting debit is to the Inventory shrinkage account, as shown below.
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When ADJ2025-865 is saved, SOS creates a corresponding journal entry and assigns to it the reference number SOS-21459. The journal entry can be viewed in SOS after syncing with QuickBooks Online.
To locate the entry in SOS, go to Sync > Journal entries. Use the Date column and adjustment transaction listed in the Memo column to help you locate the appropriate journal entry reference number, which is displayed in the Ref # column.
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In QuickBooks Online, journal entry SOS-21459 is accessible through the Inventory asset register and Inventory shrinkage report from the Chart of accounts.
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The QuickBooks Online journal entry for SOS-21459 is shown below. The Description column includes a reference to adjustment transaction ADJ2025-865, the SOS Inventory source document for the journal entry.
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Additional information about adjustments:
- When the inventory quantity is decreased by the adjustment, SOS Inventory will calculate the value of the decrease based on the actual value of the items being removed from inventory. Actual value is based on the valuation method selected and the transactions that brought the stock into inventory.
- When the inventory quantity is increased by the adjustment, SOS Inventory will calculate the value of the increase based on the purchase cost listed in the item record.
- If the journal entry reflecting the adjustment is edited or deleted in QuickBooks, this change will not affect the adjustment transaction in SOS Inventory. This will cause an imbalance in the books.
- An item bulk edit in SOS Inventory can create an adjustment in SOS Inventory when the inventory quantities and values in the import sheet are different from the numbers in the system at the time of the data import. This adjustment will not automatically post a journal entry to QuickBooks. As the Export data and Import data tools are most commonly used to edit items in bulk and enter starting inventories that are already accounted for in QuickBooks. Not creating the journal entry in QuickBooks is the intended behavior. If your intent is to use the bulk edit feature to update inventory quantities and values in SOS Inventory and have the accounts in QuickBooks reflect the value change, you must edit and save the adjustment that results from importing the data.