Write off full inventory due to natural disaster.

[jgpboone]

My small retail business lost all inventory ($10,000 worth) due to a hurricane/natural disaster. And we have gone out of business because of it. I want to write off all inventory. I was told to enter it into cogs or end of year inventory. I’m confused on what to do. Here is my understanding: cogs- the cost of me purchasing the inventory for resale, I should enter all my purchases which total $26,000? And then in end of year inventory write $0 since there is no inventory?  Does this write off the loss of $10,000? Thanks for your help.

[MinhT1]

Yes.

To write off the lost inventory, you just report the ending inventory as 0. This has the effect of increasing your Cost of Goods Sold (COGS) and reduce your profit (or increase your loss).