I'll bet this is all now clear the day after. On the right Cost of Goods Sold is £10,939 and the £7500 is labelled Closing Stock. The correct stock was brought forward and £1500 will be next years amount.
If you look at the closing stock figures they are negative.
Hi Rob
The closing stock figures in the P&L should be negative, think of it as part of the cost of good sold, these were not sold and therefore form part of the movement in stock so are in effect a reduction in the purchases and opening stock.
The closing stock figure in the P&L as CR should match the DR in closing stock assets in the Balance Sheet.
As Tim pointed out (which i missed) the total cost of goods sold is £10,939 being opening stock of £14,000, purchases (new stock) of £4,439 less closing stock of £7,500
The actual sales amount does not form part of the stock 'valuation' as the margin has to be taken into account... Though I would be slightly conscious of the round stock amounts....
Is there a balance sheet at all for these accounts?? I only ask as I recently helped a friend whose accountant did the P&L only and did not do a balance sheet so missed so much!
Even if you do an income and expenditure account it still is best practice to balance it with a balance sheet...(its in the name haha)
You would be amazed at the errors I have seen where a balance sheet is not considered necessary!
HTH
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