Stock & Sage help please - The Book-keepers Forum (UK)

clare92 · Veteran Member

Stock & Sage help please

Wella · Expert

Hi Clare

According to Ask Sage

At the end of month one DR Stock (1001?) with the closing stock figure and CR Closing stock (5201?) with the same.

At the beginning of month two reverse the above
At the end of month two repeat the same as end of month one with new closing stock.

Repeat month two procedure for month 3,4,5 etc

If you have access to Ask Sage it's article 11212

HTH
Bill

-- Edited by Wella on Friday 12th of November 2010 06:04:55 PM

clare92 · Veteran Member

that really does help. thank you very much, its appreciated :0)

clare92 · Veteran Member

I have done the journal as above and it has boosted the monthly P&L up by £17k (the value of the stock) should there not be some kind of journal for opening stock?

Im getting mysef really confused the more i look at it. I dont think the P&L should showing such a big profit.

thanks

Julie Hall · Senior Member

Hi there, at the start of your accounting period the accountant should have given you a journal for the opening stock figure (normally sage figure 5200), with your other opening journal entries. And this opening stock will stay the same until your next accounting period. Hope this helps.

Stardoe · Guru

Hi Clare,

As Julie said you should have a figure for opening stock from your accountant. This needs to be entered as part of the TB as a debit to 1001. Then when you do your stock take at month end you will need to reverse this opening stock figure out and enter the new closing stock figure. Therefore the following journal needs to be done:-

(Assuming your opening stock figure (in 1001) is 5,000 and your new closing stock figure is 6,000)

DR        Opening stock        5000
CR        Stock                      5000
DR        Stock                      6000
CR        Closing stock          6000

You'll find that the new stock figure on the Balance Sheet will be 6000 and your P & L will show the difference between the opening stock and the closing stock figures. (CR balance if the closing stock is more than opening and DR balance if it's the other way round).

Hope this helps!

Pauline

clare92 · Veteran Member

I think im gett ing my head round it. Does the journal above need doing each month? I was told that you dont touch the opening balance figure until the next financial year?
Sorry if im sounding a bit vague but im trying (in vain) to complete a sele learn sage course.
thanks

GrahamG · Veteran Member

Hi Clare,

Pauline's advice is on the nail. I would elaborate it as follows:

Let's say you start a financial year and there is no stock value on the balance sheet (keeping it simple).

Month 1: You make £5,000 of Stock Purchases (DR Purchases CR Creditors / Bank / Whatever)

End of the month, you have £1,000 of stock unused (DR Stock Account on the Balance Sheet and CR Closing Stock on the P&L)

Month 2: First journal will be to move balance sheet stock value from previous month into revenue account, so: DR Opening Stock (P&L) CR Stock Account (Balance Sheet) £1,000.

During month 2 you buy another £5,000 worth of stock purchases, so (DR Purchases CR Creditors / Bank / Whatever). So, total available stock in month 2 on the P&L is £1,000 + £5,000.

At the end of month 2, you have £2,000 closing stock; so, DR Stock Account (Balance Sheet) and CR Closing Stock on the P&L. So, at the end of month 2 you have £2,000 stock value in the balance sheet and the P&L has been charged with £4,000 worth of cost of goods sold i.e. Opening Stock £1,000 PLUS Purchases £5,000 LESS Closing Stock £2,000.

What you do in Month 2 is what you would do every month. This is exactly what Pauline has said.

GrahamG

-- Edited by GrahamG on Monday 15th of November 2010 09:37:53 PM

Stardoe · Guru

Thanks for confirming what I said Graham

Clare, the reason some people do this on a monthly basis is so that they can prepare monthly management accounts. Doing the stock journal monthly gives a more accurate gross profit figure for the month. Some people only deal with the stock on a yearly basis for the final accounts which is why they use the same stock figure from the beginning of the year.

Pauline

Julie Hall · Senior Member

Hi there, I am a little confused as I was advised by another bookkeeper as follows:

We do have an opening stock figure which she journals into the sage accounts at the beginning of the year to Opening stock on P&L from the balance sheet. Then at the end of each month we do a stock check/valauation and then debit the stock 1001 and credit closing stock 5201 (dated end of the month) and then on the 1st of the following month reverse the above.

Any views on this method would be appreciated.

Thanks

JohnMathew · Newbie

Its really helpful for others and appreciative. Thanks for the sharing.

Stardoe · Guru

Hi Julie,

I think what you have described is virtually the same as I said in my post

As long as you have a stock figure in the balance sheet and an opening and closing stock figure in the P & L this is fine.

This will appear on the P & L as:-

Opening Stock                  xxxx
Add Purchases                  xxxx
                                          xxxx
Less Closing Stock           (xxxx)

Cost of goods sold            xxxx

Wella · Expert

I can understand why this is confusing. Normal practice is to do exactly what Pauline has said but I think software limitations prevent Sage from being able to do that on a monthly basis

Reading Julie's last post, the other bookkeeper is describing what Sage tell you to do, where the opening stock is only entered once, at the beginning of the year (otherwise at year end the opening balance would be from the previous month, which would throw the yearly figures.)

I am not 100% on this but I think it has to do with the way Sage reports on the P&L. Which has a Period column and a Year to Date column

It shows a rolling P&L in the year to date column (which must use the Opening Balance figure from 5200) and the monthly value in the period column. I think what is happening behind the scenes is that Sage takes the 5201 Closing Stock DR from previous month and uses that internally for the opening stock of the current month.

This is an extract from the example in article 11212

For the second and subsequent months the following apply:

Opening stock figure is taken as the value of the Closing Stock nominal code, 5201, debit therefore equal to £3000 for month two.
Closing stock figure is taken as the Closing Stock nominal code, 5201, credit, equal to £2000 for month two.
Purchases figure taken from relevant nominal codes grouped together on the Profit and Loss report under purchases.

Like I said I am not 100% on this but it is the only way I can see that it can be done, without affecting the year end procedure.

Happy to be shown different

Bill