Hello,
What is the report or how can I create a report from the accounting software Manager to determine the cost of goods sold for each sales invoice? The accounting entry with the sales invoice shows only two accounts, customers and sales, while the tax requirements in Egypt require me to combine an entry from the cost of goods sold to inventory with each sales transaction if using the perpetual inventory policy. Thank you.
Why do you need to know the cost of goods sold figure per each sales invoice? It’s not really possible to calculate it because sometime the cost is not known until later time (in case of negative inventory).
The new way to revaluate your inventory on hand and the cost is based on all sales and purchases using Inventory Revaluation Worksheet
You can read this guide: Inventory Revaluations - Manager.io
Calculating the cost of goods sold for each sales invoice is crucial because it’s a fundamental aspect of continuous inventory management and financial accounting. It ensures that the cost of goods sold is accurately matched with revenue on each sale, which is a standard accounting practice. It’s important to know the cost even if it’s determined later due to negative inventory, as this reflects the true financial picture. The Inventory Revaluation Worksheet is a helpful tool for managing inventory cost but not that I wanted i need journal to cost of goods sold
Thanks
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How overheads are allocated to production cost will vary between businesses and between goods within a business. Which makes a general solution valuable to all Manager users difficult to define.
I would advise to use a separate inventory and point if sales system (POS) and use Manager for tax accounting only. As @Patch mentions COGs are differently defined in different countries for different types of businesses. From simple presentation of the Sales and Cost prices of an item to very complicated calculations of COGs for an item including fractions of direct labour, energy, equipment, etc. costs. This goes beyond simple accounting solutions and I doubt that the Egyptian tax authorities would require this per invoice because they may not know the constituting COGs.
I think The previous response is not entirely accurate because as long as the software can generate profit and loss reports at any given moment, it can calculate the cost of goods sold for each stage of the product sale. It’s natural for there to be accounting constraints, either at the level of each sold item or on each invoice. The program’s ability to calculate these costs is based on the data entered and the accounting principles applied.
I agree with @michael_nabil . Technically speaking Manager has the data to be able to calculate these figures.
But there are too many edge-cases for cost of goods sales to be calculated per transaction for general ledger purposes. It also makes inventory management more complicated due to negative inventory and limited (e.g. production order cannot create more than 1 output item type).
My solution is to abandon per-transaction cost of goods sold calculations and instead to revaluate inventory using periodic entries using Inventory Revaluation Worksheet.
I’m not quite sure where does this report that shows inventory costs per sales invoice fit in. @michael_nabil can you be more specific what exactly do you expect to do with those figures?
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In the perpetual inventory method, the cost of goods sold is continuously calculated, with every purchase recorded as it happens in the Purchase screen within the Manager program. Therefore, it is logical that when inventory is sold, an entry is made that reduces the inventory value by the cost of goods sold.
The Cost of Goods Sold (COGS) Entry is the accounting entry where the cost of goods sold during a specific accounting period is recorded. This entry is made in the company’s accounting books to complete the accounting and tax cycle. Tax authorities require this to ensure that each product is associated with its cost as long as the perpetual inventory policy is used.
Simply put, what I’m requesting is for the Cost of Goods Sold entry to appear alongside the sales entry in the same Sales screen, or for there to be a detailed report where I can obtain these entries linked to the sales invoice number. This feature would provide a more seamless and comprehensive view of the cost associated with each sale, making accounting and record-keeping more efficient and transparent. Thanks
@michael_nabil customer can purchase item from you that supplier has delivered but didn’t issue invoice yet.
In this case cost of goods would be unknown at the time of issuing sales invoice to customer.
Another example. Even if supplier issues invoice before you sell the item, maybe there are other costs (e.g. Freight-in) that will allocated to inventory at later stage after sale is already made.
In the first case, your cost of goods sold is unknown, in the second case it’s inaccurate.
And these are just two simple examples. There are more complicated ones where customer returns, refunds or manufacturing is involved.
Not to mention, in the old days, before computers, inventory on hand has been traditionally revaluated periodically. You would not be calculating cost of goods amount for each transaction separately.
When you claim tax authority requires cost of goods sold to be calculated for each sale transaction individually. Which tax authority? Have you got any source to back this up?
Regarding the accounting entries for sales under the perpetual inventory system, they are mentioned in the well-known accounting principles books i provided a link to an illustrative website
https://www.principlesofaccounting.com/illustrative-entries/perpetual-inventory/
The tax laws merely clarify that as long as you follow the policy of perpetual inventory, you know in advance the requirements for implementation.
I am not sure what the issue is here. Manager follows exactly the process as you linked to.
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When you issue a Purchase Invoice $3,000 for inventory item it will in Chart of Accounts show $3,000 in value of inventory and $3,000 in accounts payable (which will clear once payment is recorded.) This is exactly the same as in your linked example.
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When you issue a Sales Invoice for $5,000 for that inventory item Manager will in Chart of Accounts show $5,000 as Income and $3,000 as Expense, also exactly the same as in your example.
Below screenshot is modified with a COGs group and total (Gross Profit) under Chart of Accounts and illustrates the Summary screen that results from implementing points 1 and 2 above.
Question is thus what does Manager not do or comply with?
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I created a report customized for what I wanted from the program, and an image of the report is attached
And the reporting method
But what I was asking about is a sales journal entry for an example like the following: An item of which a piece was purchased for 10,000 pounds and was sold after that for 20,000. The sales entry is required with the invoice.
thanks
Sorry but my advice is to get used to Manager and ditch the idea of making journal entries. If anything please read:
https://www2.manager.io/guides/9820
Specifically:
Most record transfers between accounts. In fact, no transaction involving the actual receipt or payment of funds by a business can be recorded via a journal entry.
In summary, I want to clarify that I prefer not to manually input journal entries, as the example journal entery i post befor it’s from invoice QuickBooks accounting software streams the translation of purchase, sale, or payment transactions into journal entries. This is advantageous for our record-keeping, especially for tax purposes in Egypt, and it offers the valuable feature of linking each document in the accounting cycle to its corresponding accounting entry. However, my confusion lies in the Manager program, where the invoices screen includes a journal entry icon that displays entries without the “Cost of Goods Sold” section. While many have suggested it’s unnecessary, I’ve discovered that the cost of entry sales is indeed present in the program, albeit requiring the creation of a special report for access, as previously explained.
Agree.
If you want to trial a software product then embrace that program’s approach. For Manager that means using journal entries only as a last resort to support functionality not provided by other Manager functions.
Alternatively if you want a program which works like another program, that’s best achieved by buying that program.
See this post which gives Custom Report parameters that will produce a list of transactions in General Journal format.
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