How do I make an adjustment to COSG for a previous month?

QuickBooks does not close the month. It allows you to enter any transactions for any dates. It is up to your company's policy if you should or should not modify last month's financial statements. If nobody looks at the end-of-month statements and reports, you just record the adjustment with last month's date. On the other hand if the company's management do look at/accept the end-of-month financial statements you should not change it by entering an adjustment for the last month. In this case you can record the transaction this month and in the memo field note that it adjusts last month's error/mistake.

Reka

Thank you, but I understand that part.  What I want to do is remove $159.00 from COGS in August because that amount was actually booked thru credit card charges as an inventory asset and now my COGS is overstated by that amount.  Do I use a journal entry to remove it and if so, how?

So your COGS is overstated. What is understated? Your inventory?

Could you describe in more detail how did you booked the credit card charges?

Reka

Here's what I did. When I purchased this item (which was specific for a customers Job) I paid for it with my credit card, and thus entered the credit card charges.  I enter these purchases as Inventory Assets, but I mistakenly associated a cost with the item in my system so when I sold it it booked into COGS.  It should have been in the system as -0- cost, so now I have this amount in the COGS account and the credit card charges account as an Inventory Asset, does that help?  I can't figure out how to remove the amount from COGS. Thanks!

When you entered it as a credit card charge have you used the Expenses tab or the Items tab?

We used expenses tab

Based upon the problem you have I would recommend that you make a journal entry to make the correction

That's my problem I don't know how to make a journal entry to correct it. 

Sorry for the long delay - my boss took me out for lunch. I could not refuse.

As far as I understand now: when you purchased the item you debited (increased) your COGS, not inventory (because of using the Expenses and not an Item). I should have asked at the same time: how have you recorded the sale? Have you used a deposit? Have you used invoice/sales receipt? If you used invoice/sales receipt the item you used did have a cost associated with it or not? If you go to the invoice/sales receipt and click on Journal at the top (or Ctr + Y) you will see the journal entry. I would like you to look at that and check if there was anything put/taken away from Inventory. I would not mind if you could give me the accounts and the amounts with noting if it was a credit or debit.

I really would like to help but I cannot without knowing what is in your books.

Reka

Not a problem, I appreciate you trying to help, besides you can never turn down a lunch offer :)  I created an invoice for the sale of the product.  There was a cost associated with the sale, which is where I was wrong (I think).  Here is the transaction journal for this invoice:

Accounts Receivable $169.89

Merchandise sales  -$159.90

Inventory Asset         -$159.90

Cost of Good Sold    $159.90

Sales Tax Payable  $9.99

Thank you so much, that fixed my problem!!  I really appreciate your help, have a great weekend!