are you an Amazon seller who wants to make sure you learned every possible topic in managing
inventory well stay tuned to this video because we're going to cover the remaining inventory
adjustment and we're going to give you a small overview of the Amazon inventory lab
if you have any questions about this topic you can leave them in the comment section below and I'll
do my best to help you and of course if you feel the video helped you I hope you will click like
and don't forget to subscribe to get updates on new videos that come out all the time how
did we find cost of goods sold in previous videos well we had an account called purchases where we
recorded every merchandise purchased transaction for what we paid for the merchandise we also had
an account called inventory asset that represented the beginning inventory in one month which became
the ending inventory of the next month and of course we had our main cost of goods sold account
now how did we find the cost of goods sold well originally we started with the beginning inventory
the inventory that we had at the beginning of the month however what did we do in the very first
month well logically if it was the very first month that we were buying and selling on Amazon
that would mean in the first month the beginning inventory was equal to zero and that means that
there simply was no beginning inventory number and we would just move purchases to the cost of
goods sold account exactly the way we learned in the prior videos then we know that the goods
available for sale would simply be equal to the cost of purchases because there was no beginning
inventory then of course we would wait until the end of the first month and find out how much money
worth of inventory we have by physically counting it and if we imagine we had $4,000 we would put
a debit to represent the ending inventory in this month which is the beginning inventory in the next
month and then make a balancing credit to cost of goods sold and in this example the cost of
goods sold at the end of the first month would be two thousand dollars but what if we had inventory
before we started using QuickBooks let's imagine you started buying and selling before you started
using QuickBooks in that case you would have to find out what you had on hand at the start of the
first month that you were using QuickBooks opening inventory balance adjustment would
be necessary the way you would make an opening balance adjustment for whatever you had in the
bank account or any other asset that you had at the moment that you started using QuickBooks we
would use the account inventory asset and we would use this other account that accountants use to
set up a company and record the value of all the assets and liabilities this is a special account
that automatically comes with QuickBooks and it's called opening balance equity and of course
you would have to make a debit to the inventory asset for the physical amount of inventory that
you had on hand at the moment that you started using QuickBooks and you would use this opening
balance equity account as the balancing credit that's really the reason for it and don't worry
too much about what opening balance equity is the very first time you file your income taxes
for your Amazon online store your tax accountant will know what to do with this account opening
balance equity that's it that's all you have to do and you were already shown the journal entry
in QuickBooks how to debit one account and credit another and once you set this up everything else
you do in the second month and in the third month and so on is the same as what we learned in the
prior videos in this little video series now how do we work with this Amazon inventory lab well the
Amazon inventory lab is for Amazon sellers that can get help managing their merchandise inventory
items with an additional app that at least at this moment costs $50 a month payable to Amazon they
call it the inventory lab and it's an interface that allows you to both track and manage all the
individual inventory items that you buy and sell the details of using this inventory lab is really
beyond the scope of this course you really have to watch some of the Amazon tutorials and maybe even
read some of the text that they give you if you're going to use the Amazon inventory lab however for
those who use this add-on app you should be able to identify your ending inventory money amounts
at the end of each month and this inventory lab this app would be very helpful in helping you find
out your ending inventory number in order to make the adjustment that we learned about to help find
your cost of goods sold and your gross profit so here's a basic overview of what to do it's
easy if you study this separately when you look at this picture the inventory lab looks very complex
but if you know your products and you know your customers and you know your business all you have
to do is read some of the text and you should be able to figure out how to use the Amazon inventory
lab know it has menu choices across the top for you to be able to look at different aspects of
your buying and you're selling and your progress however the most important tab in this inventory
lab is the inventory tab and if you click on it what will happen is you will be able to set the
from date and the to date for the information that you want to see so you click the inventory
tab then set the from date and the to date after you do that you should look at the very bottom
of the inventory lab and it will show you what your ending inventory number should be in order
to make the final adjustment for ending inventory cost of goods sold and gross profit when you look
at the bottom of the inventory tab after setting the dates the bottom would look something like
this now notice the three different sections this amount is the amount that Amazon is saying that
you told Amazon is picked up from the truck and going to the Amazon Fulfillment Center and at
exactly the moment that you set the date this is the amount the amount of inventory or the money
amount of inventory that you paid for that's physically sitting in the Amazon Fulfillment
Center waiting for you to sell and that means the total inventory that's actually available for you
to sell physically at the end of the month that you have not yet sold is the total in the bottom
right so these are the money amounts that you paid to buy the inventory and the bottom right
number in the inventory tab after setting the dates is the number that you will use as your
ending inventory to make your ending inventory adjustment and what's in transit plus what is
already in the fulfillment center is the ending inventory number I hope this helped our beloved
Amazon merchants during this time of crisis and of course I encourage you to please contact me with
your questions especially if buying and selling on Amazon is not the only thing your business does
and I thank you all for the job that you do god bless you and thank you for helping our country