Inventory cost and sale not reconciling

1

I’m setting up Manager for a small car dealer business - we have one-off stock purchases that I assume form part of our inventory (i.e. they are an asset to our business that we sell to make our income). However, I’m having trouble working out how to use inventory correctly. What I want is to enter one vehicle purchase (e.g. Kia Rio) at the purchase price (e.g. $2000) in the inventory. Then when this vehicle is sold I want to assign the payment to this car in the inventory with the sale price (e.g. if we sell the Kia Rio for $6000 I want Manager to recognise this as a profit of $1000 in the Profit and Loss statement).

At the moment I can link the purchase and the sale (using ‘inventory on hand’ for the purchase and ‘inventory - sale’ for the sale). These two actions (purchase and sale) are linked in the inventory. However, the calculations are incorrect - it is incorrectly showing up as a loss in the inventory (and not even a figure that is possible based on the sale and purchase price!) and on the Profit and Loss Summary the total sale price is showing up as profit (as opposed to the sale price minus the original purchase price). I’ve double-checked all the entries and searched in the forum and I can’t understand what I’m doing wrong. Am I using inventory correctly?

2

If you sell for 6000 and buy for 2000, surely the profit is 4000, can this be clarified before answering further?

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3

Yes - you are correct. My apologies - I’ve been working on this all day and just pulled an example out of thin air when I was writing my question (i.e. these are not the actual numbers I’m working with).

4

Step 1 is to set up the car in inventory , no need for purchase or sale price- I used car, you could use Kia Rio

Step 2 Process your purchase invoice

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Step 3 Process your sales invoice

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Step 4 P&L Account

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5

Ok - that makes sense. Thank you for the very clear instructions. Just to clarify - I would enter the data manually as you demonstrated using the invoice system, rather than assigning the sale and purchase to the inventory from an imported bank statement? This is potentially where I was going wrong.

6

I would say Yes, but have never tried Bank Rules for inventory purposes

@Charlie350 - Using Bank Account Spend/Receive or Cash on Hand Spend/Receive should also work. Use Invoicing if the Invoice and Payment dates are separate