I have some inventory needs to return to supplier to rework. How to do the stock adjustment and record this transaction?

Hi there, Jonathan.

You’ll need a two-step process in QuickBooks Online (QBO) to accurately track both the inventory leaving your possession and the expense of the rework. I’ll provide more details below.

Step 1: Reduce your on-hand inventory for items sent back to the supplier for rework.

Here’s how:

1. Sign in to your QBO account.
2. Click the + New button and select Inventory quantity adjustment.
3. In the Inventory Adjustment window:
   • Adjustment Date: Enter the date the inventory leaves your possession.
   • Inventory Adjustment Account: Select the account where the inventory value will be temporarily transferred. You should create a new account for this, such as a Current Asset account named Inventory Sent for Rework or something similar. This account will hold the value of the items while they are with the supplier.
4. Choose the inventory item being returned.
5. In the New Qty column, enter the quantity you will have after the adjustment (for example, if you have 100 and send 10 for rework, enter 90). Alternatively, in the Change in Qty column, enter a negative number for the quantity being sent back (e.g., -10).
6. Once done, click Save and close.

Step 2: Record the supplier’s invoice for the rework service.

Here’s how:

1. Click the + New button and select Bill (if you’re paying later) or Expense (if you’re paying immediately).
2. Select the supplier’s name in the Payee field.
3. In the Category/Item Details section:
   • Account: Choose or create a suitable Cost of Goods Sold (COGS) account, such as Rework Expense or Repair/Rework Costs. Alternatively, you can use an Other Expense account depending on your company’s accounting policy.
   • Amount: Enter the cost of the rework service as charged by the supplier.
4. When finished, click Save and close.

Following these steps ensures your on-hand inventory count and COGS or relevant expense accounts are accurate.

If you need any help with QBO, just return to the Community forum. We’re always here to assist.