Procedures for Adjusting Inventory in MYOB
Inventory Adjustments enables item values and quantities in the Items List to be altered.
In a properly functioning perpetual inventory system, where all items are linked to the one inventory account, the inventory account should balance with the Items List. If they disagree, you should adjust the Items List so it agrees with your physical stocktake. Once it is corrected, you should adjust the value of the inventory account to equal the Items List. If your Creditor's value is correct, the adjustment must be offset to the Cost of Sales account.
Before you record an adjust inventory transaction, you have to work out the current value and quantity of the item you wish to adjust. To do this you need to print the Items List Summary report. This will show you every item you have recorded and, if it is an item set up as I Inventory, then also its Quantity and Total Value.
The Items List Summary report is not date sensitive. This means post-dated sales and purchases will affect the balance.
Catering for shrinkage/spoilage
Many businesses have stock that is either broken, stolen or can no longer be sold after a certain date. An example is the food industry, where once the food passes the 'use by' date, it can no longer be considered an inventory item and has to be written off.
In MYOB Retail Manager there are two options for dealing with stock shrinkage/spoilage of your stock items:
Option 1: Sell items back to your own store for $0.00
- Sell the items back to your own store for $0.00 or
- Complete a single item stocktake
- Press Ctrl + U or go to the Information menu and choose Customers
- Press F5 on your keyboard and enter your store's details - as little or much as you like.
- Click the Commit button or press F10 on your keyboard
- Click Yes to approve the transaction and then press Esc to close the customer window.
- Press F6 or go to the Transaction menu and choose Sales
- Enter the customer number you have created for your store.
- Enter the barcode of the items you will be:
- Using for self consumption or
- writing off as damage stock
- Change the selling price to $0.00 and then press Tab
- If you are unable to change the price check your security options.
- A message appears, warning you that you are selling the item below cost. Click OK
- On the same screen, once all items have been entered, go to the Payment details section and highlight Cash
- In the Paying field enter the number zero 0 and press Tab
- Click Yes to commit the transaction
Option 2: Complete a single item stocktake
- Go to the Stock Management menu and choose Stocktake
- A message appears, asking you to close all active windows, click Yes
- Enter your staff number
- From the drop-down list, select Single Item Stocktake
- Enter the barcode of the item that has been damaged or written off for self consumption
- In the Qty field located on the RHS or the window, enter the new quantity.
- The previous quantity on hand is displated in the Expected field, located on the far RHS of the window
- Click the Add button
- Click Commit or press F10. A message appears, suggesting that you make a backup of your data file. Click Yes
- Another message appears advising that the stocktake was successful. Click OK and then press Esc to close the single item stocktake window.
A journal entry CR Cost of Goods Sold DR Spoilage expense can be created to record the information in MYOB business management software.
Alternative Method may be used in other editions of MYOB
To cater for these types of transactions, an expense account called Shrinkage/Spoilage should be set up.
Writing off items due to shrinkage or spoilage
Adjusting item quantity and total value
- Display the Items List Summary report to view the Units on hand and the Total Value for the item to be written off.
- In the Inventory command centre, click Adjust Inventory
- In the Date field , enter the date
- In the Memo field type e.g. Write off stock that is past its use by date - item number.
- In the Item Number field, type the item number and press TAB
- In the Quantity field, type the number being written off e.g. -15
- The dollar amounts appearing in the Unit Cost field needs to be zero (if the total currently on hand is being written off). Delete the amount or enter 0 into this field. Note that a value will still appear in reports because MYOB software divides the figure entered into the Amount field by the Quantity to give you the unit cost.
- In the Amount field, enter the total value of the stock that is being adjusted /written off e.g. -49.60
- In the Account field, type 6-2150. This is the expense account to cater for any shrinkage or spoilage
- Click Record.
- Display the Items List Summary report to check that there is no stock of the item written off. A message stating Nothing to Print should be displayed.
- If you wanted to display the report with nothing in it, mark the Include zero quantities checkbox, in the Finishing tab of the Report Customisation window.
- Click OK and close to return to the command centre.
Cases may arise where your Cost of Sales/Expenses account and inventory may be overstated or understated. This could occur where a batch of stock was incorrectly included/excluded from a stocktake. When this has occurred, an adjust inventory transaction will need to be recorded to adjust both the Quantity and Total Value of the item.
Adjusting Inventory in the Items Register in MYOB
- Display the Items List Summary report to view the units on hand and total value for the item in question.
- In the Inventory command centre, click Adjust Inventory
- In the Date field, type in the date
- In the Memo field, type e.g Increase Units on Hand for Item 201 to 50 and Total Value to $400.
- In the Item Number field, type 201 and press TAB
- In the Quantity field, type 10 as we are increasing the quantity on hand from 40 to 50.
- The dollar amounts appearing in the Unit Cost field needs to be zero. Delete the amount or enter 0 into this field.
- In the Amount field, type 100.00 as we are increasing the total value of the stock from $300 to $400.
- In the Account field, type 5-1100 Purchases.
- Click Record
- Display the Items List Summary Report to check the figures for Item 201.
The Items Register allows you to view an overall picture of your inventory movement or Audit Trial. The register allows you to view and access all inventory transactions, including inventory adjustment journals and inventroy transfers. These journals can then be edited or reversed/deleted as required.
The Items Register provides running balances per item based on the quantity on hand and the value of an item that you specify.
You can also generate the history of an item with more detail. Transactions entered in the Enter Sales (Invoice), Enter Purchases(Bill), Adjust Inventory and Transfer Inventory windows appear in the Item Register window. Click the zook arrow next to the transactions to open the window in which the transaction was originally created.
A transaction will not have a zoom arrow if:
In summary, the zoom arrow won't appear if the date entered in the Dated From field is a pre-conversion, pre-financial year or pre-purge date.
- The date of the transaction is before the first day of your conversion month
- The date of the transaction is before the first day of your financial year (if you've used the Start a New Financial Year feature in your company file)
- The date fo the transaction is within a purged period (if you've purged transactions from your company file).
In order for a zoom arrow to appear next to an inventory journal transaction, the transaction must have been entered using MYOB Accounting/Accountin Plus v13 & account software v7 or later. (Inventory transactions are those that are assigned an IJ Journal number)
To change the date on a transaction in the Items Register
- From the Inventory command centre, click Items Register
- In the Search by field click the down arrow and select Item
- In the next field click the search icon, select item e.g. 204 from the list displayed and click Use Item
- In the Dated From and To fields, type a date to be changed.
- Click the white arrow next to the date for the journal. The Adjust Inventory window appears.
- In the Date field enter the new date.
- Click the OK button. The adjusted transaction appears in the Items Register
- Click the Close button.