QB Issue Resolution:

QBO makes it hard since they hard wired the adjustment to COGS-shrinkage

adjust the item qty lower on the inventory item screen, then report on the account COGS-shrinkage to find the value of the adjustment

then a journal entry

debit business expense account
credit COGS-shrinkage

The value is subject to use tax if your state requires it, most do.

Resolution for Issue 'How do we account for stock used internally?' available: Yes (Solved).
Source: Intuit Community forum.

How do we account for stock used internally?: this issue or error code is a known issue in Quickbooks Online (QBO) and/or Quickbooks. Support for this issue is available either by self-service or paid support options. Experts are available to resolve your Quickbooks issue to ensure minimal downtime and continue running your business. First try to resolve the issue yourself by looking for a resolution described below. If it is a complex issue or you are unable to solve the issue, you may contact us by clicking here or by using other support options.

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