I downloaded the evaluation copy of Manager (server edition) for testing, and hoping to buy a license once it sufficiently meets my demand.
I simply tested with a case study below:
Excellence Ltd is a Gas Station that sells only petrol & diesel via pumps. It is assumed the business just commenced, therefore all account balances and inventory balances are zero and all business assets are summed up into Fixed Asset = N45,000,000 and Cash in Bank = N10,000,000.
I setup a purchase order for 33,000 litres of petrol at N135/litre. Haulage and loading fee are N70,000 and N30,000 respectively. That makes my cost price N138.03. I subsequently copied these to purchase invoice and used the ‘Spend Money’ option to pay for the product from a Cash Account I already setup and funded.
Having made payment, I record the stock in the Inventory items using N138.03 as cost price and N150.00 as sales price. Quantity on hand = 33,000 ltrs and Average Cost = N138.03.
Just for testing, I sold off the entire stock using ‘Sales Invoice’ obviously at N150.00 sales price so that Inventory item is now = 0 litre.
Ideally, this simple transaction and operation is supposed to yield a Net Profit of N395,000 (assuming no expenses were incurred), but why are my having a Net Loss of N4,160,000.
Please, can anyone assist with clarification as to why I have this P&L statement reading Net Loss?
Its very hard to read the picture as the writing is extremely small. but you should only have an amount in inventory-cost in expenses. You have an amount in product stock the word looks like. This should not be there. This is why you are reading a loss
thank you @dalacor for your prompt response and sorry for the hard-to-read image. I have cropped off the excess. Though you actually got that right… Product stock is an account I created to be able to proceed with the Purchase Invoice, lemme explain that…
the second image below, shows Account option to be selected while i was preparing the ‘Purchase Invoice’, there was no account that best described the operation of ‘paying supplier for product’, hence i created Account ‘Product stock’ in Chart of Accounts. Otherwise, the amount would have been posted in the Suspense Account.
This whole process is incorrect - the timing of the payment is not relevant to the inventory placement.
Your Purchase Invoice is incorrect - you are purchasing inventory therefore you shouldn’t be expensing it.
Step 1 - create your inventory items - Petrol & Diesel
Your Purchase Invoice will now look like this (not exact currency match but you get the picture)
Thanks a lot @Brucanna, you have just saved me a big headache and simplified the use of the ‘Inventory Items’ . Apparently, I was doing it wrongly. Thanks much… thanks to @dalacor for contributing.
I will continue with the evaluation, if I have any other questions or suggestions, will post them as soon as I discover…
