I am looking at the default chart of accounts in Sage 50 2013, where the stock nominal 1001 is used in the balance sheet - that's ok but how will the P&L be able to calculate the period Profit/Loss if it does not adjust Purchases for opening/closing stock?
-- Edited by Trolley Ronnie on Tuesday 6th of August 2013 01:15:17 PM
Real life accounts are as you are finding nothing at all like those in the text books.
The reason behind that is that many items that when studying are on the face of the P&L or B/S are in the real world included in the notes to the accounts or simply are not in the accounts at all but are rather a calculation outside of them.
Inventory where applicable will appear in the balance sheet under current assets and movements in inventory for businesses that carry it will appear in the P&L combined with the notes to the P&L.
As Kris says, what software are you using? (If Sage, I'm out)
Kind regards,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
And there you go, crossed in the post. All yours Kris.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
The simplest method for stock adjustments is assuming that at the start of the period NL 1001 shows your opening stock on the balance sheet;
1. Post all stock purchases to NL 5000 or similar, this will be your P&L figure.
2. At the end of the period calculate the closing stock value.
3. Post a journal entry to make NL 1001 equal the closing stock figure.
4. This will then leave NL 5000 showing the cost of stock sold during the period.
If the stock figure is larger at the end of the period you will need to Dr 1001 and Cr 5000 if smaller then the reverse.
I'm surprised the default COA does not have opening and closing stock codes. In my Sage 50 they are 5200 and 5201 respectively. If you don't have those codes you can always create them.
The normal P & L movement for stock is Opening stock + purchases - closing stock, but in the standard COA Sage takes the difference between the Opening and Closing stock and deducts it from the purchases figure. If you have to create 5200 and 5201 in Sage make sure they are on separate lines within the COA so that they show separately in the P & L.
Example:- Say you have £5000 stock at the end of Feb and £7000 at the end of Mar, your journal entries will be as follows:-
1001 Opening stock @ 1 Jan Credit £5000 5200 Opening stock @ 1 Jan Debit £5000 1001 Closing stock @ 31 Jan Debit £7000 5201 Closing stock @ 31 Jan Credit £7000
Thus you are left with £7000 for your stock figure in the BS and the movement on stock in the trading part of the P & L as £2000.
Your P & L will then show (excerpt)
Purchases (whatever figure has been entered in the 5000 code from invoices entered) say £12,000 Opening stock £ 5,000 Closing stock (£ 7,000) £10,000 (COGS)
Your Balance Sheet stock figure should be £7,000 (1001)
I'm surprised the default COA does not have opening and closing stock codes. In my Sage 50 they are 5200 and 5201 respectively. If you don't have those codes you can always create them.
There is even a wizard in Sage 50 to help you deal with stock.
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Never buy black socks from a normal shop. They shaft you every time.
Yes, Peasie is right of course...there is also an Open/Closing stock wizard in Sage 50 Just cos I don't tend to use wizards, doesn't mean to say they are not there!...lol
Yes, Peasie is right of course...there is also an Open/Closing stock wizard in Sage 50 Just cos I don't tend to use wizards, doesn't mean to say they are not there!...lol
Funnily enough - even though I mentioned the wizard, I don't use wizards either.
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Never buy black socks from a normal shop. They shaft you every time.
Yes, Peasie is right of course...there is also an Open/Closing stock wizard in Sage 50 Just cos I don't tend to use wizards, doesn't mean to say they are not there!...lol
Funnily enough - even though I mentioned the wizard, I don't use wizards either.
Lol....I prefer to do things the "old fashioned" way. I think it's ok to use wizards if you don't need (or want) to understand the entries/process behind it.
Just cos I don't tend to use wizards, doesn't mean to say they are not there!...lol
