Damaged Goods Inventory poses some problems in QB.  If you have all of the same kind of thing that is damaged it isn’t too hard, but if there is more than one item you want to move out of resale inventory to a damaged goods inventory, that is tougher.

There is basically three ways to do it.

1. For each item that is damaged, create a sub-item with the item name-dmgd. Then use inventory adjust as a value adjustment and move the item and cost out of resale inventory to the damaged item.  You have to use a value adjustment to move the cost since when you lower the qty of the resale item the cost will go to the expense account you choose and to bring it back out and associate it with the damaged good item in inventory you have to tell QB to do that using a value adjustment.

2. Create a dummy item called damaged goods. Create sub items for each damaged goods item, then do the value adjustment to move the item as mentioned above.  This puts them all in one location on the item list, that might be handy then again it might not depending on how you use the list.

3. Create one inventory item called damaged goods. Do a value adjustment to move all damaged items to this one item. The downside of this is that all items costs will be averaged so the sales COGS number will not be right for the damaged item sold.

When you sell use the damaged goods inventory item. If you find that you can’t sell the damaged item, then use inventory adjust to lower the qty, and use a COGS-damage expense account as the adjusting account.