Closing stock like any other entry has to be entered via a Dr and Cr. The Dr goes to current assets in the balance sheet and the Cr to cost of sales in the profit and loss (effectively reducing your costs as you have stock left over from what you bought).
When you do your year end close down and balance forward your closing stock in the balance sheet becomes your opening stock for the next year. You need to get it out of the Balance Sheet so you Cr Stock in Balance Sheet and Dr Costs of Sales (hence the opening stock in your cost of sales). Then Dr Balance Sheet/Cr Cost of Sales to recognise the closing stock that year.
And so the process continues year after year. Closing stock one year becomes opening stock in your cost of sales the next year then you need to journal in as a year end adjustment the closing stock for that year.
As Nick said, you will always have your stock on the Balance Sheet as it is an asset.
Your journal entries at the end of every month need to be:-
1001 Stock (BS) CR xxxx (to get rid of the closing stock for the previous period) 5200 Opening stock (PL) DR xxxx 1001 Stock (BS) DR xxxx (with the new closing stock figure for the present period) 5201 Closing stock (PL) CR xxxx
Your stock on the current BS shouldn't be zero, but should be the current closing stock figure. Do you have a figure on the BS at the moment?
