Good morning all, I do the bookkeeping for a Charity and although the sales and purchasing are very simple I am struggling with accounting of the stock for year end.
The Charity only take stock once a year so I have opening & closing balance. I was advice to entered the Stock O/Bal using a journal entry as well as a journal entry to remove the purchase from the P&L. (I use Quick Books Online (Plus))
This is what I have done so far.
Stock O/Bal
1st Journal
DR Stock on Hand (Asset)
CR Purchased Stock (Income)
To remove Purchases from the P&L
2nd Journal
DR Stock on Hand
CR Purchases (Expense)
Question: is these Journals correct please?
How will I then account for the closing stock balance?
I'm a bit stuck so please any advice or help will be greatly appreciated
So hows about an intro before we start. We always ask newbies!
Usual stuff - what prof body do you belong to, do you work for yourself or in a practice/ firm, are you a bookkeeper or accountant, what qualifications, how long in role, where up to in your studies-what exams passed/with what body/in midst of doing, where based, what you did before this role? That sort of thing. Helps get to know you but also how best to pitch answers.
Also - please add your first name so that it appears under the signature bar on your posts? Saves everyone looking it up each time!! (Edit profile --->signatures)
Who did you get the journals from? Do you have a copy of those journals? What date have you been asked to enter them on? What happened at the prior year end re the stock?
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Good morning Joanne, my apologies was a but rude of me just to jump in without a introduction.
I am François and are currently in full time employment as a manager in education. I have just started a role as a Treasurer for a local charity in the Northeast of England. I have gained my AATQB status and Level 3 AAT qualification now a year ago.
I am hoping that volunteering my services might give me experience and the confident to eventually go self employed.
That's me in a nutshell, any other questions please feel free to ask.
Hi Joanne, regarding your questions. The bookkeeping of the Charity was basically done in a simple hard back book with column drawn lines and then later transferred to a spread sheet. Just a few weeks before I started the secretary purchased QBO I then entered all the opening balances (excluding stock balance) and all the sales and purchases for the year. All bank reconciliations is up to date.
I am now in the proses of doing year end. I was advised by another Bookkeeper to create the journals to account for the o/bal for the stock dated the start of the financial year to be closed. I was also advice that the purchases need to be removed from the P&L for year end via a journal.
Well done on the level 3. Are you doing level 4 studies now? or will you just go with the AATQB licence once you are able to apply?
Sorry, I hate doing this but end up doing it a lot on here, a few more Qs.
Who is doing the actual accounts for the year end for this charity?
To give this some context - what date is the year end?
When you stated you entered opening balances - did you actually set them up on QB as the closing balances on the last day of the last accouting period? Or as opening on the 1st day?
Plus what TB entries did you key in, ie did you key both SPL and SPF?
They should be done as at the closing TB and entered as the last day of the prior period (all TB items), ie profit and loss and balance sheet figures so that your brought forward in QBs for the new financial year are correct and will then just be the Bal Sheet figures in the b-fwd TB.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Hi Joanne many thanks for your kind words and welcome.
My hope is still to do Level 4. My thought proses is to eventually apply for AATQB licence and will be happy with a few clients just to breakeven I feel I stand a much better chance to do my Level 4 if I am actually working in the profession.
Who is doing the actual accounts for the year end for this charity? To give you a bit of insight of the Charity, its a members club. The sales (bar sales) consists of using the facility for functions by members only.
Purchases predominately for bar stock and equipment. Equipment depreciated at 25% per year.
Other expenses Licence fees, repairs and then Donations out to the Trust. We do not receive any donations for the club. Members fees is paid directly to the Trust
To give this some context - what date is the year end? Year end is 31 August 2018
When you stated you entered opening balances -did you actually set them up on QB as the closing balances on the last day of the last accouting period? Or as opening on the 1st day? I am sure I have entered them as o/bal on the 1st day of the financial year.
Plus what TB entries did you key in, ie did you key both SPL and SPF? Not to sure about this one. I used all the information given to me for the year ending August 2017.
I had the closing balances for money at bank, closing stock and equipment balances after depreciation.
Does it make sense??
-- Edited by Seahorse on Wednesday 29th of August 2018 12:41:06 PM
Hi again
TBH - having a few small bookkeeping clients will not help you at level 4, other than perhaps on the final accounts front (not tax, for that I would suggest the ATT when you have finished). Level 4 is more about dealing with larger clients albeit it does give some decent insights which will ultimately assist with providing advice to smaller clients centering around their business planning and that type, as opposed to tax.
Back to this query. The problem you have is that I cannot answer your query directly to give you the correct answer until the closing and opening balances for the prior year are correct. In part the reason I asked the Q (unanswered as yet) as to who will be doing the final year actual accounts was because I was assuming that this would be a qualified accountant and it would be worth running the last years events via them before you do any further adjustments for this year (and even perhaps leave them to do the year end adjustments).
But ploughing on....
You received the closing balances. But appear to have entered them as opening balances. Im assuming as at 1 September 2017? Can you check your software and clarify? This is where you appear to have gone wrong. You needed to enter them as closing balances - ie on 31 August 2017. EVEN if your Quick books only starts from 1 September, you can key entries as at 31 August 2017 (you may get a message saying 'you are outside the year end do you wish to continue' or some such. yes thats fine. But there also appears to be issues with the figures you have been given as they do not appear to have a closing reserves, call it profit, surplus or whatever. There must be something.
So what entries did you do to process the closing balance for stock last time? Can you extract the entries in a report and post it as a pic (use the Advanced Editor option in the reply box, but dont forget to redact any identifying features from the document before you upload it!)
Also - note that you should never carry the NBV of assets. You should show total cost in your asset account. Then total ie accumulated, depreciation in your balance sheet - yes the two net off but always need to be shown separately in the accounts/notes.
So - the question (another) is - can you reverse the entries made at the start and re-enter them correctly in he correct date? If so, you may find the latest journal process easier, once we get to that.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Hi Joanne, many thanks for your advice. Apologies the Club accounts will be presented for year end to Local Charted Accountants. I will get all the information together and attach as advised.
Not sure how close an eye they need to keep on the stock, but certainly if this were a pub/restaurant I would suggest keeping full details of stock via an EPOS system then adjusting the accounts on a regular basis for any wastage/drinks to staff and all that malarky, plus monthly stocktakes. especially given the margins are so fine on such. Plus keep an eye on differences between wet and dry stocks, checking items are not out of date/on a sale or return basis and the like and for any pilfering. Would be worth having a chat with the clubs management/trustees to see how far they want to go and if they want monthly stock adjustments have a word with the Accountants after they have sorted any year end adjustments. Or come back on the forum once they have adjusted QB for you. (Always encourage them to do so, rather than just doing their adjustments in their own records.
Just to expand on your learning though
- dont adjust the purchases account for stock. Adjust the COGS part of your SPL (you may need to create accounts for opening and closing stock in the 'purchases' section of the software. Not the same thing though.
- in your first journal and second journals - you suggested a debit to the stock asset account. This increases the stock figure in the asset section, ie shows MORE stock. A debit to this account is a closing entry.
- dates of input are crucial.
Oh and NEVER backdate something into a period when the data has been sent to the Accountant without them knowing or their express approval (or you can mess the accounts up big time!)
Im assuming there is no VAT.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Good evening Joanne, to be honest it is only a very small club. They don't even have a till. There are about 8 groups that meet there twice every month. All organisers are responsible for the Bar usage. There is a retired person that will go in the next morning to count the usage and to stock up. The consumption value then becomes the sales for the meeting. I will then raise an invoice and will then receive payment by cheque. GP is about 38%
I have put in place a new policy to ensure accurate accounting for the usage and stock take after each meeting as from the new Financial year. I will be able to track the stock usage and compare to the sales.
The setup is actually very simple and its been that way for many years. They very stuck in their ways.
Good morning Joanne hope you well, apologies its been a mad day.
I have delete the two journal entries that I was advised to do (as per my 1st posting) so now I am basically back to the beginning before asking for help.
I have attached a File containing all my opening balances I have seen that I can see my mistakes. I did try to see what the software would do if I tried to change the date the message I receive is " The transaction you are editing has been reconciled Saving changes could put you out of balance next time you try to reconcile"
File 1,2 &3 contain information about the previous year 2017
All other pages is basically opening balances for bank and equipment. I have not entered any balance prior to this financial year
I must have made a real hash of this!!!
Oh and NEVER backdate something into a period when the data has been sent to the Accountant without them knowing or their express approval (or you can mess the accounts up big time!) Noted, that I will never do.
Im assuming there is no VAT. Correct no VAT
I really hope all is not lost.
Many thanks for your help Joanne, thank you so much.
Hi boys John - do you just call them P&L and Balance Sheet like I do? Cant stand this other new fangled non-sense (SPL an SFP), which Doug - as you can see I got wrong anyway. But thought I should use the up to date terminology given Francois is in the newly exam passed category.
In my defence - you know I type too fast and never check anything before hitting that 'Post Quick Reply' button so anything can happen. Never mind the lack of glasses and the predictive text thing taking over.
Actually Doug I was talking Sun Protection Factor - dreaming of when we might need it again Instead of needing the blithering heating and getting rust from going out in the rain!!!!!!!
Francois - I cant see an attachment!
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Hi boys John - do you just call them P&L and Balance Sheet like I do?
Hi Joanne
Yep, P&L and Balance Sheet for me, never heard the other two acronyms before, even if it was transposed. Had a feeling the pl bit was what it is but I couldn't work out what the s was. On the other would have taken a guess at financial projection.
As long as they don't do a Projection In Sales Stock take we'll be fine.
Hi Doug
Thanks for the explanation, obviously my CPD is lacking somewhat.
Edit. Sentence removed that made no sense
-- Edited by Leger on Thursday 30th of August 2018 08:28:43 PM
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Hi Joanne about 200 pages...?..only joking. Its 10 pages with very little detail on it, P&L Balance Sheet and Journals for opening Balances.
Joanne I really appreciate your help so its all if and when you can have a look at it.
Many thanks
Francois
Its Ok - I will send you my bill. I dont come cheap!
First things that jump out
- you said the year end was 31 August - so why is doc1 showing the year end 31 July? Where these from the manual records? Where these figures agreed by the Accountants as being fully correct or did they make adjustments?
-Doc 2 you said related to the prior year. It is also marked up as being 'purchases' for the year ending 2017. why then does it have figures relating to 2018 (all from the 2nd line, if the year end is indeed 31 August. All of them if the year end is July). What is the 'savings' column? Looks like the report also shows sales.
- why are your opening journals all on random dates? Some are actually keyed in the prior year/some in the new year. Dates are absolutely CRUCIAL!
Im ignoring the treasurers report, this years balance sheet and P&L for obvious reasons.
My advice - Reverse ALL opening journals - NB Using the dates you used when you set them up.
Phone QB online to see if you can re-set the year end to the correct date (f it is indeed incorrect in the software). Also to check HOW to date something on the last working day of that old year. Im not sure what the warning message relates to - HAVE the accounts been reconciled, which goes back to my first Q re the Accountant, ie have the Accountants gone into the software to lock down that period so you cant alter it again? Would be surprised if they had given the journal dates. So QB should be able to confirm how to override.
Then I would suggest you hand write/excel a list of journal entries to set up the whole CLOSING balance for the period end, including stock, check it agrees with the former year end TB and then re-enter ALL of those journals on the last working day of the year end. Including the P&L info.
QB will auto roll the year end and the P&L will drop to reserves. You can then grab a brought forward TB to check you only have the BS entries and then you can do your opening stock journal.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position