Set Up Beginning Balance

Hi, I want to create a new database in manager due to some improvement in Manager and business flow changes in the company. My question is :

  1. I have purchase invoice from Dec 2016 that I haven’t received the item yet, I’ll receive it in Jan 2017, what should I do ? Financial year is Jan-Dec that’s why my beginning balance as per 1 Jan 2017.

  2. I have sales invoice that I’ve received the down payment in Dec 2016 but will do the delivery in Jan 2017 with the final invoice.

Need advise how do I need to treat this kind of situation with the current inventory system ?

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Re-adopting Manager is no different from converting from a previous system to Manager. Set your Start Date. As you create your chart of accounts, enter opening balances to match closing balances from the previous use of Manager. For sales or purchase invoices pending at the time of transition, you must enter individual invoices, but with dates before the Start Date. Manager will use any sales or purchase invoices from before the Start Date to establish the opening balances in Accounts receivable and Accounts payable.

The first thing to remember is that the Inventory movement and Inventory Location changes in Manager only affects Inventory quantiles and not the Inventory financial values. Having the Purchase Invoice dated Dec still has the financial recordings as Dec, the Manager Inventory changes doesn’t shift the financial recordings to Jan just because the delivery wasn’t until Jan

To track the Purchase Invoice Inventory separately from the physical Inventory movement you need to activate the Goods Receipts tab under Customise, below Settings.

Activating this tab causes all inventory to be “homeless” until directed to a home, by this I mean, after processing the Purchase Invoice click on the Inventory Item’s Qty value you will see a Report like below for Inventory Item ABC - waiting for delivery.

Once the goods have arrived, you would create a Goods Receipts for the Inventory Received

And this would change the Inventory Items Qty Report to the following

None of this has caused any accounting changes to the Dec dated & processed Purchase Invoice

Was the initial Sales Invoice just for the down payment (deposit request with no Inventory quantities), if yes, then there are no Inventory impacts until the final Invoice & delivery, or was the initial Sales Invoice for the full amount (all inventory quantities) but only a down payment was required until delivery, if yes, then see below.

Being an over year end transaction, the treatment depends on the significance of the transaction.
If its of low value then it would be reflected in the Inventory Item’s Qty Report as below until a Delivery Note was issued - the Delivery Note tab has to be activated to track Inventory invoicing separately from Inventory movements.

Noting that the final Sales Invoice would just be a reprint of the initial Sales Invoice but with the inclusion of the down payment.

If its of high value then consideration should be given towards making year end adjustments which transfers the sale into the following year.

Hi Tut,

The problem is, all the purchase invoice and sales invoice that make begore the start date, the system assumed all the goods been receipt or delivered where the actual inventories haven’t been receipt or delivered.

That’s why I’m asking what should I do now ?

Hi Brucanna,

All the downpayment need to raise Invoice since it’ll be related with VAT (Gov. rule). That’s why now I’m confused what should I do to move it to 2017. Manager assume all transactions before the start date, the inventories been delivered and receipt.

This is related to the fundamental differences between accrual and cash basis accounting.

For the Dec Purchase Invoice you could post the Invoice total to a BS - Asset - Goods in Transit account, this way the Accounts Payable liability situation is not affected while leaving the Inventory on Hand account and the year end Inventory Stocktake still matching off. In the new year, you would do a Journal crediting Goods in Transit account and debiting the individual Inventory Items.

For the Dec Sales Invoice you have two options, (1) just invoice the down payment (no inventory details) with the invoice total being posted to a BS - Liabilities - Deposits Taken account and in the new year transfer the deposit via Journal on to the final invoice, or (2) Invoice with the full inventory but you need to via Journal reverse the sale in Dec to a BS account and then reverse that Journal in the new year. The Journals would not included the VAT components of the Sales Invoice - only include the inventory details.

The down payment only invoice is a financial transaction (cash advance) not a sales transaction therefore generally not affected by VAT. When the Inventory is being invoice then the VAT is applicable.

You mean right now, the inventory management based on cash basis ? Eventough already added Goods receipt module ?

No, I don’t mean inventory management is on cash basis. I was pointing out that when transactions are recognized differs depending on whether you are on accrual or cash basis. If you are on accrual basis, income and expenses are basically recognized regardless of whether you have paid or been paid. If you enter a purchase invoice, you own the inventory from an accounting perspective, even though it may still be in transit and even though you have not paid the purchase invoice.

I don’t know whether you are using accrual or cash basis accounting. You did not say. And I was not commenting on how to resolve whatever specific problem you think you have. I was just pointing out that what you describe could be related.

I’m using accrual basis, if that’s the rule of the accrual basis I don’t have any choice.

Yes you do, if you are purchasing in Dec but not receiving until Jan and you don’t want the actual inventory to change (due to year end) then you initially post the whole Invoice value to a BS - Goods In Transit account. Then in the new year, via Journal, transfer out of Goods in Transit to individual Inventory Items as per the Invoice.

For the Journal ignore the VAT as that was taken up when the invoice was processed in Dec.
Also the Journal will put the inventory directly into store, no requirement for Goods Receipt therefore do the Journal when the goods are actually received.