Inventory accounting using Opening Stock + Purchases - Closing Stock

Can you show a screenshot of the Journal ?

If you were doing a Journal entry for Year End Closing Stock then it should look like this.

i dun have opening stock, the i got add purchase, but the purchase at the end of 2015 only pay 3k.

means tat i add purchase 100k
only pay 3k
then balance stock is 97k

so how i key in?

On the last day of the financial year you transfer your BS to the P&L Opening Stock account, as per the first two lines of the Journal above. The Stock on Hand account is now zero.

Then you take up the value of your year end stocktake by debiting Stock on Hand and crediting Less Closing Stock as per the last two lines of the Journal above.

Your Purchases account should equal the amount spent on buying Stock through out the year.

I started entering balance sheet and entered opening stock. i am not using inventory, and i am taking stocky value manually on every month. How can i enter the closing stock value, to prepare Trading profit and loss account.

Normally, the Opening/Closing Stock process is done on a yearly basis but it can be done on a monthly basis if you follow the steps below.

  1. At the end of the “first month” do a Journal that transfers the BS Stock on Hand to the P&L Opening Stock - for this exercise I entered the Opening Stock as 1250.00.

  1. At the end of the “first month” do a Journal that takes up the value of the (closing) stock on hand

  1. Then at the end of each month you edit (not create) the previous months closing stock Journal , (2) above, by changing the date and the stock values. Continue this process until the last month of the year.

  2. In the next year you “start” the process all over again, at the end of the first month do (1) & (2) and for the next months do (3)

In the BS Asset section you create “one” account called Stock on Hand (NOTE: do not create separate opening/closing stock accounts in the BS). To enter the opening stock value go to Settings - Chart of Accounts and click "Edit: next to Stock on Hand, then click Starting Balance and enter a value & Update.

I’ve spent an hour looking for the ‘BS asset section’! Where is it please?

Sorted

Hi

I just want to understand how to set up the Opening Stock and CLosing Stock account in the P & L Statement? Are they debit or credit accounts?

They are not so much debit / credit “accounts”, but P/L accounts which may have debit or credit balances.
If you review post #17 above you will see an illustration of that.
In the Chart of Accounts set-up of the Cost of Sales (New Group) account, tick the expenses box.
Then allocate those “Opening Stock + Purchases - Closing Stock” accounts to that group.

OK…I understand that part now. BUt I have a follow up question:

AT the end of the period, the opening balance will have a balance after you did

Opening Stock Debit
Srock on Hand credit
Stock on Hand debit
Closing stock Credit

What happens to the balances of the opening and closing balance?
do you just not care what happens to the balances of the opening and closing stock?

Using your example for the next period:

Opening Stock 8250
Stock on Hand 8250

So now opening stock balances is 15250?

I am just confused with how you do adjustments yearly with the opening and closing stocks. It seems to me that if my closing stock is, for example, 10000, then my entry for the closing stock would be this

Stock on Hand 10,000
CLosing Stock 10000

or is it

Stock on Hand 1750
Closing Stock 1750

To reflect the 10,000 closing stock

Thanks

Antonio

Oh I see post no 47, so at the end of the period, just edit the opening closing and stock on hand balances, don’t add a new one.

But if I now want to see what happened to the previous years financial statements, what happens to the entries of these accounts in the previous years? By changing dates for these transactions, will the previous transactions doing these sets of journal entries remain in the previous years.

Antonio

In post # 47, that is only if you are changing the stock values on a monthly basis.

When doing the year end stock, then you must do a new journal.

Please help how do I do this on a yearly basis. I am not sure I understand Manager very well when it comes to this.

A sample of a yearly opening and closing would really help me understand how this works. Thanks

A sample of a yearly opening and closing stock journal is shown at post #43.
During the financial year your P&L opening and closing stock accounts have zero values.
On the last day of the financial you do a journal as shown in post #43.
When you change to the dates for the next year financial year on the Summary tab, then the P&L opening and closing stock accounts are reset to zero - you don’t do any adjustments on the first day of the new financial year.

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Brucanna but the opening stock account should be the values from the closing stock (previous year) should not be a zero ?

Not throughout the year, you only have Sales Less Purchases values.
The opening stock account remains zero until the last day of the financial year, otherwise at the start of the first day of the new year you would be showing a loss before you had even completed the first sale. - see below.

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Thank you!

2 posts were split to a new topic: Expanding inventory from retail to manufacturing