--- title: "Beginning Balances Inventory Count" slug: "beginning-balances-inventory-count" description: "Establish accurate starting inventory on R365 go-live by zeroing GL balances with a journal entry then approving the first count." updated: 2026-05-18T19:42:03Z published: 2026-05-18T19:42:03Z canonical: "docs.restaurant365.com/beginning-balances-inventory-count" --- > ## Documentation Index > Fetch the complete documentation index at: https://docs.restaurant365.com/llms.txt > Use this file to discover all available pages before exploring further. # Beginning Balances Inventory Count If this is the first inventory count in Restaurant365, or if inventory balances are incorrect because this process was skipped during setup, the beginning balance inventory count process establishes accurate starting inventory values in the system. The process has three phases: completing the first inventory count, creating a journal entry to zero out any pre-existing Balance Sheet inventory balances, and then returning to approve the count. The journal entry credits each inventory account and debits its corresponding COGS account — ensuring the GL is clean before the first count posts. Before getting started, [a completed inventory count template must first exist](https://docs.restaurant365.com/docs/en/inventory-counts-create-and-edit-an-inventory-template). > [!WARNING] > Important Note About Performing This Process After Go-Live > > If inventory transactions have already been posted in R365 before completing this process, zeroing out the Balance Sheet requires a more complex cleanup that involves entering zero counts, verifying $0 balances, and reapproving future counts. Contact your R365 CSM or reach out to [R365 Support](https://help.restaurant365.net/support/home) before proceeding if existing inventory transactions are present. ## Prerequisites The following are required before completing the first inventory count: - [Purchased items](/doc/docs/purchased-item-record-settings-tab) and [recipes](/doc/docs/new-recipe-record-coming-soon) are set up for inventory tracking in R365 - A [Fiscal Calendar](/doc/docs/fiscal-calendar) is configured - [GL accounts](/doc/docs/gl-account-record) are properly classified in the Chart of Accounts - At least one [inventory count template](https://docs.restaurant365.com/docs/en/inventory-counts-create-and-edit-an-inventory-template) exists - The first inventory count is complete and left in an unapproved state --- ## Navigation 1. Open the Inventory app. 2. Select Inventory. 3. Click Inventory Counts. ![](https://cdn.us.document360.io/5c9d1111-0c69-4e96-8910-d7f2750fdc9d/Images/Documentation/image-CKWJ30JL.png) From the Inventory app, select **Inventory**, then select **Inventory Counts**. --- ## Enter a Beginning Balance Inventory Count > [!NOTE] > Before beginning these steps: > > A completed inventory count must exist and **be left in an unapproved state** — do not approve it yet. Learn about [starting an inventory count.](/doc/docs/create-and-enter-inventory-count) > > > > Complete the journal entry steps below first, then return to approve the count in Step 8. If an inventory count has not bee started yet, see Prerequisites above. **1) After the first inventory count is complete and left as unapproved, run the Balance Sheet for the following report parameters.** Set the **Date**, **Location**, and **Report Type** to match the inventory count. A Fiscal Calendar and properly classified GL accounts must be configured for the report to display meaningful data. - Report Type - YTD - Filter By - Location - Filter - The Location noted on the Inventory Count template - As Of - The date of the first inventory count - Detail Level - Detail - Account View - Name - Hide $0 Balances - No - Rounding - No rounding - Show Unapproved - No **2) View the Inventory Asset Value section to see the inventory balance.** The values in this section are used as a reference when entering amounts in the journal entry. ![](https://cdn.us.document360.io/5c9d1111-0c69-4e96-8910-d7f2750fdc9d/Images/Documentation/image-PC77WO22.png) **3) Create a new journal entry using one of the following methods.** **Create button:** Click **Create** in the top ribbon. From the dropdown, under Accounting, select **Journal Entry**. **Search:** Enter "Journal Entry" in the R365 search bar. Under the Create section, select **Journal Entry**. ![](https://cdn.us.document360.io/5c9d1111-0c69-4e96-8910-d7f2750fdc9d/Images/Documentation/image-VL233J2Y.png) **4) In the new journal entry, enter the date and location of the first inventory count in General Information.** **New Journal Entry** > This article references the [new journal entry experience](/doc/docs/journal-entry-update-2025), which will be enabled for all customers in 2026. > > At that time, the classic journal entry experience will no longer be supported. > > See [Classic journal entry documentation](/doc/docs/classic-journal-entries). ![](https://cdn.us.document360.io/5c9d1111-0c69-4e96-8910-d7f2750fdc9d/Images/Documentation/image-NXIXD5DV.png) **Classic Journal Entry** ![](https://cdn.us.document360.io/5c9d1111-0c69-4e96-8910-d7f2750fdc9d/Images/Documentation/image-U8QCAEF6.png) **5) Begin entering the Inventory Accounts by transferring the exact amount for each account listed on the Balance Sheet.** As each Inventory Account is credited, debit its corresponding COGS Account. Continue until all inventory accounts from the Balance Sheet are entered. **New Journal Entry** > This article references the [new journal entry experience](/doc/docs/journal-entry-update-2025), which will be enabled for all customers in 2026. > > At that time, the classic journal entry experience will no longer be supported. > > See [Classic journal entry documentation](/doc/docs/classic-journal-entries). ![](https://cdn.us.document360.io/5c9d1111-0c69-4e96-8910-d7f2750fdc9d/Images/Documentation/image-7CCQRP7N.png) **Classic Journal Entry** ![](https://cdn.us.document360.io/5c9d1111-0c69-4e96-8910-d7f2750fdc9d/Images/Documentation/image-4OOWV2FD.png) **6) When completed, select **Approve and Close** on the journal entry.** **New Journal Entry** > This article references the [new journal entry experience](/doc/docs/journal-entry-update-2025), which will be enabled for all customers in 2026. > > At that time, the classic journal entry experience will no longer be supported. > > See [Classic journal entry documentation](/doc/docs/classic-journal-entries). ![](https://cdn.us.document360.io/5c9d1111-0c69-4e96-8910-d7f2750fdc9d/Images/Documentation/image-B2RGH1LP.png) **Classic Journal Entry** ![](https://cdn.us.document360.io/5c9d1111-0c69-4e96-8910-d7f2750fdc9d/Images/Documentation/image-382S7D5N.png) **7) Return to the Balance Sheet and review the Inventory Asset Values — all values should now be zeroed out.** > [!NOTE] > Note: If Values Do Not Zero Out > > Check for the following common causes: > > - An item is assigned to the same account for both cost and inventory > - Items are on multiple GL posting templates and were counted on the same day > - Non-inventory transactions have been posted to inventory accounts > > Review GL account assignments for inventory items and verify that each inventory account has a distinct corresponding COGS account. ![](https://cdn.us.document360.io/5c9d1111-0c69-4e96-8910-d7f2750fdc9d/Images/Documentation/image-5REWJ0L4.png) **8) Reopen the first inventory count and select **Approve**.** The beginning balance inventory count is now complete. Follow the same steps for each additional location. Learn more about [reviewing and approving an inventory count.](/doc/docs/review-and-approve-an-inventory-count-1)