In some instances you may need to create a manual journal entry in Xero to adjust the value of your inventory & COGS.
Best Practice
We recommend that you review your COGS and Inventory values regularly and more importantly immediately after any cycle or stock count. Compare the values in Lightspeed and Xero and make the necessary adjustments in Xero.
Situations reqiring manual journal entries in Xero
- Lightspeed Inventory adjustments: These adjustmenst do not sync to Xero and require a manual journal to the financial impact of this adjustment. Inventory adjustments should only be used to reduce stock for specific reasons that prevent the stock from being sold eg. damaged, expired, donated, consumed for internal purposes, theft.
- Lightspeed Voided Invoices: When an invoice is voided in Lightspeed after COGS has been porsted to Xero, the corresponding COGS adjustment is not automaticly reflected in Xero. a manual journal entry is need to correct this.
- Lightspeed Stock/cycle Counts: physical stock / cycle counts performed in Lightspeed don't update into Xero. A manual journal is essential to align Xero's inventory values with the physical count
- Unsent stock order: If received stock is not sent to Xero, discrepancies will arise.
- Manual transcations in Xero: where manual transaction have been entered directly into Xero (eg. supplier invoices) without a corresponding order in Lightspeed, these will also impact your Xero balances and should be considered before making your final adjustment.
Adjusting Inventory / COGS value in Xero
1. Navigate to Accounting > Manual Journal > New Journal
2. Enter the details
- Narration field - enter a description (eg. adjusting inventory to lightspeed balance)
- Date - date of adjustment
- Line 1 - Description should auto populate details entered in narration field, Account = 1400-001 Inventory, with a debit amount if increasing the value of inventory, credit amount if decreasing the value of inventory (default Tax Rate of Bas Excluded is correct)
- Line 2 - Description should auto populate etails entered in narration field , Account = 5000-200 COGS Inventory Adjustments, same amount as on the Inventory line, either debit or credit (opposite to the Inventory line. The default Tax Rate of Bas Excluded is correct.
- Review & Post
Example of Increasing inventory value - reducing COGS
Example of reducing inventory value - Increasing COGS
