How to fix negative inventory in Quickbooks With Easy Steps

The user might come across the issue of Quickbooks negative inventory when he/she arises the situation of selling the inventory products that are out of stock which is caused by mistakenly entering the sale transactions before the purchase transactions. Now, getting about the brief of how can the users encounter this issue. Now, jumps into a more detailed answer to this.

If you are here, then you might have come across negative inventory and want to know every quick and possible way that solve the query of how to fix negative inventory in Quickbooks. But, before directly dive into it, you must get to know what is Quickbooks Negative Inventory issue and what are the causes and factors responsible for this issue.

Through this blog post, you will get all your answer related to the title. So, adhere to yourself till the end of the article and fix the negative inventory in Quickbooks.

What is Negative Inventory in Quickbooks

As mentioned above the real cause of the error entering sale transactions before purchase transactions bring the unbalance in the amount of the sale and the purchase and there on lead to the error issue. Now, let’s come into how it works

When the user sells the product that is recorded in the company file

1. The user can purchase products through the Items tab on the item receipt bill, bill, or check and credits cash, credit card, A/P, or Credit Card Payable.

2. Thereon, sell the products from the inventory. But, becomes unable to sell more than the stock items.

3. There are two transactions recorded by sale transactions given below:

Editing A/R and crediting sales: Sale/ Receivable transactions
Crediting Inventory and debiting COGS: Inventory/ COGS transactions.

4. Try to run P&L and expense report that shows the sale receipts and invoices.

5. Then, run B/S reports that show bills, checks, credit card charges, and receipts.

When the user sells products that have not been entered in the company file

1. Saving the invoice data for the Receivable/ Sales transactions

2. The products that are not on hand are assumed by Quickbooks as:

Similar to the average cost of the other item on hand.
From the item list, Quickbooks assumes the cost of the item

3. Quickbooks COGS/Inventory transaction uses the assumed price.

4. Quickbooks avoids assuming the cost of the next purchase and will record the purchase transaction as Quickbooks inventory adjustment to correct the difference.

Factors leading to the Negative Inventory

There can be so many factors responsible for the negative inventory. Read the list below to know more about them.

In order to bring the B/S in a balanced form, the damaged data forces the user to frequently rebuild the file.
An imbalance between the number of COGS and Profit.
The system becomes corrupted and thus encounters an overflow error.
If you are having an imbalance of the cash-basis Balance sheet then also get ready for the issue.
Mistakenly enter the wrong Vendor Reports.
Having Error: Itemhisupdateengine.cpp —- LVL_ERROR-Error: Verify Item History: Bad target COGS for the item on your system.
Target average cost mismatch error appear with Error: Itemhistupdateengine.cpp — LVL_ERROR–Error: Verify item history Target average cost mismatch error
Error: LVL_ERROR–Error: Verify Account: Invalid balance. The amount of overflow has occurred. Rcrd = 99.
Error: Verify Account Balance failed. Calc bal = 0.00, List bal = *overflow*
Data within the balance sheet inventory account is not purely corrected.

Issues during Using Quickbooks Negative Inventory

These are the issues that every user can encounter while using Quickbooks negative inventory. In order to improve your business functionality, the user needs to know about it as they can hinder the software’s use. So, read the guide below and enlighten yourself with issues that you may have during Quickbooks negative inventory.

Negative Inventory brings errors in Supplier Reports

The COGS/ Inventory is natural on the invoice. It can bring Quickbooks Inventory Adjustment to the next bill by adjusting the COGS/ Inventory transaction when the user sells the out-of-stock inventory.

New Inventory Product with no Average Cost

Without adding the initial QOH/ VOH, if the user has crafted a new inventory product with the Product Cost then Quickbooks tends to assume that the product has no average cost. Rather than a bill, the very first transaction of the item would be used as an invoice. Thus, lead the sale towards the negative inventory and the cost price of the item becomes different from the purchase price and this way you might come across an adjustment on the P&L report.
If you try to create a new inventory without the Product cost. Then, selling the item includes no further inventory. That further leads to the issue with Quickbooks that does not maintain any data or information as per the concern of average cost. Therefore, it shows $0.00 when calculated. The data becomes inaccurate until the user has mentioned the average price with a check, the value on hand, credit card or adjust Qty.

Inventory Assemblies Brings Incorrect COGS on Job Costing Reports

If you are having an insufficient quantity in stock and later you have crafted an assembly that brings the difference with the average cost. Then this will help to adjust the inventory of the build transaction- COGS, that allows the invoice to be included. But, the build transaction prevents the details related to customers.

How to Verify if the Data File has Negative Inventory?

Now, moving on to this section to get to know how to verify if there is any data file with a negative inventory. So that, we can easily perform the solutions after verifying the presence of issues. So, let’s jumps into the steps below without wasting any further time.

The first step that you need to do is to navigate to the Quickbooks software in your software.
Click on the Reports tab and then search for the inventory option.
Go to the Inventory Valuation Detail and click on that.
Once done with the following steps, the user requires to search all the occurrences of the negative amounts in the column states On Hand.

If you are having Quickbooks Premier or Enterprise 2014 without the feature of advanced inventory, move towards these steps below:

Visit the menu of Reports.
Select the option of Inventory and after that click on the Inventory Item Listing.

Key Points to Consider Before Resolving the Issue

These points are very important to remember as they will help you to resolve the issue in no time and if you are having the same issues again and again then these consideration points surely help you.

Ensure to create a backup of the company file without any errors.

Don’t forget to save the backup in the folder that is easy to access.
Try to start with a new data file as Quickbook negative inventory proves to be a risky and complex task.

Now, after considering all these important measures, move towards the solutions and quick fixes through which you can easily fix the negative inventory in Quickbooks.

Fix Negative Inventory in Quickbooks With Given Steps

After covering all the above different sections in this blog post. Now, it turns to read about these fixes that you all waited eagerly.

Navigate to the Discover menu and then click on the Reports tab.
Select the Inventory option and then move towards the Inventory Valuation Detail.
Go to the drop-down menu and tick all the dates that are showing on the system’s screen.
Now, scroll the reports that showing in the negative amount on the tab named On hand.
Proceed with the settings of the bill with the accuracy of the date.
Once done with the steps, perform steps 3 and 4 again.

Type the Purchase Before Sales

Move towards this solution in order to enter the purchase before sales. To carry on with the process, perform the steps below:

Try to modify the settings of the dates.
Go to the menu bar and then click on the Reports tab.
Click on the inventory option and also navigate to Inventory valuable detail to press it.
From the drop-down menu, select the dates option and thereon press the all button key.
Now, modify the date of the bill.
At last, save all the changes that you have performed above.

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Sales Recent Transaction

Try this method when the data of the Quickbooks inventory reports are not fitted well and the average cost of the product gets missed. The user can get the value according to the value of the initial transactions like a credit card, hand Qty/ value, check, bill, etc. Proceed to the steps below to carry out the procedure.

Go to the reports menu and click on the inventory.
Select the option Inventory Valuation summary.
Now try to view the double item having inaccurate values through the use of QuickZoom.
Navigate to the initial bill and run the bill window.
Then, modify the bill date before the date of the starting invoice.
Choose the save option and try to close it.
Verify the incorrect product and later on, try to modify it.

How to Prevent Negative Inventory?

Well, avoiding the tendency of selling the inventory items until the buying of the products can prevent the issue of negative inventory. In this section, we are going to discuss the same covering ways to prevent negative inventory.

Setting up the Inventory Items with an Opening Balance

The first step that you need to do is to create the inventory product and then enter all the information required for the same.
Try to enter QOH and Value to mention the mean cost.
You need to purchase the items before including the sale. Make sure to avoid, if you do not acquire any product on hand.

Sales Orders and Estimate to enter the Sales

Firstly, enter the order of the customer as a sale order.
This can also be done by typing customer order as the invoice.
Try to mark the invoice as pending. Navigate to the edit option and also mark the invoice as pending.
Ensure to purchase the items first and then include them in the company data file.
Once done the following steps, try to convert the sales order to invoice and you can also mark the invoice as the final one.

Pending Invoice to Enter the Sales that have Inventory

Type the customer order in the invoice.
Navigate to the menu bar and select the option Mark Invoice as Pending
Purchase the inventory item before including the same into the Quickbooks data file.
Click on the menu bar, select the edit button, and choose Mark Invoice as final.
Modify the invoice date to the shipment date of the items.

Well, this is the full guide related to negative inventory in Quickbooks. Hopefully, the article covers everything to solve all your queries related to the topic. Let’s know how relevant and informative you find this article and also check out other articles on the site covering quick fixes to the errors that you may encounter on your system.

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