Thanks in advance for replying @Tut
I’m sorry if there is too little information, let me explain it in a more detailed explanation. I helped my friend to do the initial set on manager cloud for his fertilizer selling business. But for simplicity, I will explain this with an arbitrary business.
The business has been running for a couple of months, I set September 1st, 2019, as the start date and fill the appropriate starting balance for every account based on the data my friend provided. The business has some Sales Invoices with an issued date before the start date (August 1, 2019). Here is the balance sheet look like after initial set up
A couple of days after the start date, the customer that bought the Tire want to return the Tire that he just bought. And here is what the balance sheet looks like after the return happened (Credit Note created)
What I think is wrong about that is, the amount ofInventory on hand after Credit Note is created doesn’t change, while actually I have more tire in the inventory because of the return from the customer. Should the amount of Inventory on hand be increased by the dollar equivalent amount of the Tire that was returned (950 Tire x USD 200 / Tire = USD 190.000)? I mean the Inventory on hand amount in the balance sheet is somehow misleading me to think that I only have Tire worth USD 200.000, while it is actually worth USD 390.000
My questions are:
- Is this just how manager work and there’s nothing wrong with the above behavior?
- If this is just how manager work, what should I do in order to make Inventory on hand reflect the most appropriate value when I have Sales Invoice before the start date and Credit Note from the Invoice after the start date
P.S: I don’t have any Accounting background, so correct me if I’m wrong. Also, I’m a non-native English speaker, sorry for any grammatical error