Write off inventory to record loss, damage, obsolescence, or other non-revenue reductions of inventory. When inventory items are written off, they are no longer available for sale or production, so they are no longer assets in the Inventory on hand account. Their value must be transferred to some expense account. This is done in the Inventory Write-offs tab.
ACME Distributing gives away samples of its products at trade shows. To keep inventory records accurate, it writes off the items, allocating the expense to a Trade show advertising account. The balance of Inventory on hand declines.
Click Customize below the left navigation pane, check the box to enable Inventory Write-offs, and click Update:
In the Inventory Write-offs tab, click New Write-Off:
Complete the form. Some fields appear only when relevant selections have been made in the Settings tab:
Datewill be today’s date by default. This may be edited.
Referencecan be used for any internal or external sequence. If the box within the field is checked, Manager will assign a number automatically. The program will find the highest existing number among all inventory write-offs and add 1. This field can be edited.
Descriptionis for a summary narration explaining the write-off.
Inventory itemis where you select the item being written off. Both item codes and item names show in the dropdown box.
Qtyis the number of items being written off.
New lineallows you to add inventory items to the transaction.
Location(if any are defined under Settings) lets you select where the write-off is occurring.
Allocationis where you select the account to be debited. Only expense accounts and certain balance sheet accounts can be chosen.
Taxallows you to select a tax code if the acquisition of the inventory item was subject to tax.
Tracking codelets you choose an applicable code.
Click Create to write off the inventory item(s) and make all necessary accounting adjustments.