as i started it newly, there are some items i sold earlier and now are credited back. how its cost will be calculated adjusted in my stock and margin less accordingly from my earnings and increasing stock.
how can i check or verify it? thanks
enable and use Credit Notes.
read this guide Use credit notes for customer returns and refunds | Manager
credit notes are enabled but the problem is that when items are credited not first sold on manger, and have not any stock of that item anymore, what manager will do with that.
when you select the appropriate inventory item when issuing the credit note, the inventory quantity increases as per the quantity you entered in your credit note.
the same happens when you issue debit note to your Suppliers.
thats good but the cost of that item is not adjusted in inventory not in profit loss margin statement if item cost is not in starting balance, and as i said it is not in starting balance item.
I haven’t needed to do this myself, but this is what I would try…
You will need to set a starting balance for the customer. This starting balance will indicate that they have paid you money from before you started using Manager (which is the problem you’re facing).
- Edit the customer
- Scroll down to the starting balance section at the bottom and tick the box as shown in screenshot. The date might be different for you, and you might be using a different currency, but it all works the same way.
- Choose “Available credit” and enter the value of the items that they bought from you.
- Click Update
This way, when you issue the credit to the customer, it should offset the starting balance.
However, you’ll also likely need to indicate somewhere that you’ve gained another item for your inventory. You might be able to do this in Journal Entries.
If you wait another hour or two, the forum regulars from the USA will be waking up, and some of them may be able to provide additional suggestions.
Do not do what @ShaneAU suggests. Starting balances are meant to record status of accounts on the Start Date only. Based on information you have provided so far, the customer who returned items purchased before you began using Manager did not owe you money on the start date. Nor did that customer have any available credit. Whatever transactions you had with that customer previously should never become part of Manager’s records. Only the results of that customer returning the items should be entered in Manager.
One way to handle this situation is with a cash payment to the customer, just as though you were buying the returned item over the counter from a supplier. (By this, I mean not with a purchase invoice, and therefore not through a supplier’s account.) This method does not involve a credit note.
Here is an example for an inventory item named Testing item with a normal purchase price of 50 and a sales price of 75. The example is presented under accrual basis accounting. (Cash basis accounting does not reflect inventory positions well.) For simplicity, no taxes are applied.
The item’s listing in the Inventory Items tab starts out with all zeroes. There is no cost because no items exist in inventory. If items already existed, of course, there would be a cost. But I have simplified this to illustrate the method:
Now, create a new transaction to spend money (the money you are giving back to the customer). In this example, it is a cash transaction from an account named Petty cash. Note that the Unit price has been edited from the normal purchase price to the original sales price. That is because for accounting purposes, you are buying this item from the customer at the price you originally sold it for. You originally made a profit under your old accounting system. Now, you are effectively giving that profit back by paying more than normal for the inventory item. That profit will be stored in the asset account Inventory on hand until you sell the item to a new customer. Then it will be transferred as an expense to Inventory - cost:
The inventory item now shows in inventory with its correct average cost:
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i actually tested it here on manager and it picked the (original cost of item + the cost at wich the item is returned back) which is i think wrong.
i tested the same case on peachtree and quickbooks as well the results were different there and correct, they just eliminated the profit and orignal cost and item value calculated is original value of the items multiplied by the numbers in the stock. i think it is a bug in the program so please eliminate it.thanks
I have completed testing, and Manager is behaving correctly. I have edited my earlier post to remove reference to a possible bug.
When a credit note for an inventory item is issued, the full amount of the credit note is deducted from Inventory - sales. If there is an average cost at that moment, the cost is removed from Inventory - cost and added to Inventory on hand.
In your situation, @Ajmal.khan, you had nothing in stock, so there was no average cost. Therefore, nothing was added back to Inventory on hand as a result of your credit note. Eventually, all this will work out, because you will sell the item to another customer with no debit to Inventory - cost.
My earlier example, because I showed entering the sales price on a refund payment, more than the normal purchase price was added to Inventory on hand. But that would eventually work out, as well, because you will sell to another customer at a larger debit to Inventory - cost.
If waiting for this to work itself through the system bothers you, you can use a journal entry to transfer cost to Inventory on hand from Inventory - cost. Enter only amounts, not quantities.
As for your comparison with other accounting programs, Manager did exactly what Peachtree or Quickbooks would have done if they were using the average cost method of valuing inventory. This may have looked different because in your testing with those programs you were using a different valuation method or because you had inventory in stock with an average cost.
What is your point in your latest post, @Ajmal.khan?
Your screen shots for the inventory item in question show:
- You started on 7/1/2017 with zero
- You returned 2 on 9/7/2017 via a credit note. Because you had no inventory, average cost on that date was zero. So while the quantity was returned to stock, no monetary value was added. That is how average cost inventory valuation works.
- You sold 2 on 9/9/2017. Average cost on that date was still zero, so cost of inventory sold was zero.
- You purchased 4 on 10/7/2017. You didn’t post the purchase invoice, but whatever you paid on that purchase invoice because your average cost. Based on later transactions, I assume you paid 1,1140 each.
- You sold 4 on 10/7/2017 also. These were sold at an average cost of 1,140 per unit. That brings quantity on hand to zero and average cost to zero.
Everything makes perfect sense. I will repeat advice I gave in another topic. It does not appear that you are using delivery notes or goods receipts. So you should disable those tabs. Otherwise, you must enter further transactions to properly show amounts on hand. (The current situation only shows zero on hand by coincidence.)
i am very desperate in costing method
consider the case a item is sold not in stock purchased at the time from somewhere at the moment and sold at that for purpose but later when we enter its purchase at later dates manager do not calculate its cost for the sake of margin.
Are you using Cash Basis or Accrual Basis accounting ?
If you are using Cash Basis, the purchase doesn’t calculate cost margin until the purchase is paid for.
m using Accrual Basis
So we start with zero stock
We sale 4 items for 1200 each
Inventory now looks like this
And the Summary tab is this
The next month we purchase 4 items for 900 each
Inventory now looks like this
And the Summary tab is this
Profit Margin Report
Bro @Brucanna what i want to say is
inventory item is
now there was no stock of item but the item is sold earlier but now customer is refunded for the item i.e
now it shows inventory on hand it shows is
which is not actually the cost of the item rather it is the cost of item sold on not its original cost
how we will manage it?
The transaction you entered, a Payment, tells Manager you purchased 15 pieces of MRD004 at 75 each for cash. So 75.00 will be the average cost of MRD004. And 1,125.00 will be the value of Inventory on hand. Up to that point, there is no sale involved. So your statement about “cost of item sold on” makes no sense.
I believe you are misunderstanding the purpose of the various accounts related to inventory. Did you read the Guides about inventory management?
Okay then the refund needs to go to the P&L Sales account, not inventory.
Last year your P&L Sales included the 1125.00, as that sale has now been cancelled, the refund needs to go the same account.
Then for the inventory, create a Journal Entry and Debit Inventory at the units x cost value and credit a P&L expense account, unfortunately you can’t use Inventory - Cost
Your situation is unique because the original sale was not with Manager but the refund is.
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now when we sale item is that
and item costing is
that was @ refunded back to customer
rather i think it should be as at the cost of Last Unit Cost i.e
pardon me if i am Wrong.thanks
The next sale will be at cost 50 if you do the Journal Entry described above first, but the refund must go to sales not inventory because you are reimbursing the Customer for the cancelled sale, you are not purchasing inventory from the customer.
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