Inventory in negative Value but 0 qty on hand.


So I had a unique issue this year.

Here is a summary as to what happened:

When I started working for this company(Sole proprietor) in August their Inventory was allowed to go into negative and was setup as the Average cost method for Inventory.  This created a COGS nightmare to say the least as it also created incorrect reported values for the month of December 2019(I have since corrected this.  I changed the settings(to correct December 2019) to not allow negative and changed the cost method to FIFO and have left it as such for the balance of 2020.

We incorporated December 22, 2020 and I sold all Inventory to the new entity (based on the Inventory and Services report which had accurate cost values).

My issue:

This has created a negative value in a lot of the Inventory accounts as the accounts must not have balanced to the Inventory report based on the COGS adjustment entries from earlier in the year.  I have not dug into this entirely as there were additional settings that would make this an almost insurmountable task (eg. COGS accounts used at the variance account and inconsistent Inventory accounts).

My question:

How can I correct these negative values as they should be 0 as at December 31, 2020 and likely COGS is being affected by these values?

I appreciate any help that can be shared.

  • Troy:

    Working with negative inventory is tricky. Variances generally occur when using negative inventory. You will have to go to each item and look at the transactions and see what caused the issues. Once you know the issue(s) use the adjust inventory feature to correct the issue(s). It is terribly time consuming but worth the effort once it is completed and balanced.

  • Hello Agate.  I appreciate the response.  There will be no ongoing use of this database as the sole proprietorship is no longer all assets were sold to the corporate entity so I am more so hoping for a quick fix in order to adjust the negative balances and reduce COGS accordingly as I have to assume currently it is all over valued.