I know it's probably a sill question but I am going to ask anyway as I need some reassurance that what I am doing is correct.
I have a client who is buying goods and selling them on Amazon. I only have 3 months work of books to do as he started the business in January and needs to submit a tax return year ended 5th April.
So far I have recorded £2679.08 worth of purchases(invoices to back up). I have asked the client to provide me with a stock take as at 5th April for the closing stock.
I have attached a spreadsheet of what I have dealt with so far.
Can someone have a look to see if what I have done looks correct?
I am happy with everything apart from the stock element. I don't know why but I feel I am double counting!
Your spreadsheet doesn't seem to show what you were intending to do with the stock, so I'm guessing that your concern is that it will be a debit when you already have £2,679.08 in purchases and aren't sure about the missing credit.
It may be helpful to think about the cost of the goods that have been sold as: the value of the opening stock (nil) + the stock purchase transactions during the period (£2,679.08) - the closing stock (£?). Opening stock + stock purchases - closing stock = Cost of Goods Sold. These will all be P&L accounts. So, your closing stock is recorded in both the P&L (as a credit) and the Balance Sheet (BS) (as a debit). No double count.
The Sage standard chart of accounts for a sole trader uses P&L account codes 5200 and 5201 to adjust the period purchases for Opening Stock (Dr) and Closing Stock (Cr) respectively, 1001 contains the Balance Sheet (BS) Stock value. At each period end you'd typically Dr 5200 Opening stock (P&L) Cr 1001 Stock (BS) with the value in the 1001 account and Dr 1001 Stock (BS) Cr 5200 Opening stock (P&L) with the period end stock-take value. There's no substitute for playing around with different scenarios yourself until you feel comfortable with the entries.
I hope I have understood the nature of your original question properly and that I haven't caused too much confusion in the way I've expressed dealing with stock balances at each period end.
You've hit the nail right on the head. That is the answer I was looking for and how I had intended entering it and realized that after posting the question.
It's nice sometimes just to have the reassurance that you have done it right.
