Hello @treana ,

1. So I would do this in closing off 2019 as this is before we want to actually track inventory? I would say so.

2. Can you be more specific about which journal entries would need to be entered? This will impact Inventory Asset, Inventory Shrinkage and Cost of Goods Sold? Since you said your external accountant had been making JE's to account for these GL accts anyways, you presumably know what the balances in these accounts should be at Dec 31/19.  You would make sure you have a record of this on paper, i.e. Trial Balance.  Then you make the inventory adjustments to bring all the inventory to QTY and value according to your physical inventory count at year end.  Once you do this, these GL accounts will likely be out of whack.  So you would make the necessary JE's to bring the balances back to what you know they should have been at Dec 31/19.  Obviously the inventory adjustments and JE's should all be dated Dec 31/19, and marked as adjusting entries, if you are able to do that.  It might only be in Accountant's version . . . sorry, not sure.

3. This has been done.

4. Would I use January 1, 2020 as the date for this?  Only if your December books have already been closed by your accountant.  See my notes above.  If you can't use Dec 31/19, then yes, use Jan 1/20.

5. I've already been entering purchase orders and bills for 2020, will this be ok?  It should be.  Just make sure you run all your "pre-adjustment" reports are as at Dec 31/19 as mentioned above, so you achieve the correct balances in your inventory and COGS accounts as at Dec 31/19.  Your goal is to get your inventory counts and values to line up with your year end physical inventory count.  It's only because the inventory wasn't being tracked properly before that it will take a combination of adjusting inventory and JE's to bring the accounts into line as at year end.

Best of luck - hope this helps.

The more I think about this,