I have a client who was in partnership which they started June last year they ran a small shop together, originally they made purchases (which was their opening Stock),
Is this correct:-
Dr Opening stock 1001
Cr Loan 2300
The partnership dissolved and I have done the following
cr Stock 1001
dr Closing Stock 5201
She continued as a sole trader and I was going to put the entries in as
Dr stock 1001
Cr Loan 2300
and at her year end was going to cr 1001
Dr 5201
The more I think about it the more I am conufsing myself. Any help would be greatly appreciated.
In the first year of trading you don't have opening stock (theres nothing brought forward as there was no previous year) so you would need to debit the purchases code rather than opening stock.
The same procedure would apply for the first year of the sole-trader, debit purchases not opening stock. At the year end you would debit closing stock in the balance sheet and credit closing stock in the profit and loss (cost of sales).
-- Edited by Dustin57 on Tuesday 14th of June 2011 09:49:03 AM
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