Stock on hand, why is manager telling me I have so much?

[d3mad]

I apologise for the first of many stupid questions, but I need some help here guys, TIA:

In my summary view I have $3600 inventory on hand… but I don’t.

Let’s look at just one item:

60240 W1JP -- apparently I have $25.65 on hand

If I go to inventory items and look up item 60240, I have zero stock on hand.

This item I have none of, apparently I hold $25 worth of it.

Going into that $25 shows me nothing, I can’t click it.

So let’s manually look up that item, going back to the zero quantity, let’s click on that:

I bought them on 2017-12-08 and sold them 2018-03-31.

I think I have acquitted them correctly, but what step have I left out, or what do I need to do to remove the value from stock value? I obviously don’t hold this anymore. I’m guessing I missed something.

And checking how I set up the juice to begin with (in case that’s where I stuffed it):

Manager only reports I have stock in cash accounting. This is the method I have been recommended to use by my accountant. Whether it’s one or the other, I feel I’ve made a mistake at any rate.

[Tut]

If you are using cash basis accounting, the sale is not completed until you enter a receipt against your sales invoice. Did you do that?

I would imagine you entered a payment against the purchase invoice, because you probably paid your supplier. But it looks like you entered a sales invoice only as the result of a stocktake, for internal purposes. That reduced the physical count, but not the subsidiary register balance in Inventory on hand. If you sold the juice, you may have entered the receipt of money in a summary transaction, without mentioning the sales invoice.

This is why accountants generally do not recommend cash basis accounting when inventory is involved. (In some jurisdictions, it is illegal to use it if you hold or sell inventory, because it delays recognition of income.)

[d3mad]

I called it a stock take but it was actually selling all my stock to write it off my books. ie the sales had been made over the previous month’s and I just sold them all there on the one invoice.

Yes I think you may be right, I only posted part of that picture because I didn’t think it relevant (lol). And it’s too convoluted to try and articulate.

Here’s an attempt: (and I’m starting to see what I’ve done wrong I just don’t know how to fix it):

• Yes there was an initial purchase and paid for in manager
• These particular drinks are free of GST yet all my sales through the til attract 10% GST. I never got it set up correctly. I do it differently now but this is historical and I’m trying to fix it.
• Because I’d recorded GST for all the sales, I created a sales invoice where I sell these without GST
• I then have another line item where I apply a negative sale which I thought would suffice for removing the GST from the juice. Basically the invoice tallies up all the GST free drinks and reverses the sales and balances to zero.
• This invoice itself does balance to zero.
• The sales that have been reversed on the last line item are received as payment in another invoice elsewhere.

It would be so much easier to physically show you and try and explain it but it would take forever. My next post will have a screen grab of the whole invoice (I’m typing this on mobile).

And before you roll your eyes and say, “no it doesn’t work like that. You can’t do that,” well yes, I’m seeing that now. Hence why I’m trying to fix it.

[d3mad]

to reiterate:

• these drinks were sold through the til and I recorded 10% GST on them, they shouldn’t have (this is via the til, not manager)
• those sales from the til have been entered into manager with a GST component
• I created the last line item reversing the sales that had already been recorded in manager with the GST component, so that
• I could then use this entry to record a sale of those drinks (without the GST)

It’s such a mess…

[acecombat2]

something pique my interest. why the account used by Inventory W1JP different then the rest?

[d3mad]

an error in my setting it up… If I could have just cloned them…

[acecombat2]

I can’t help it but I feel you need to reverse the entries and recalculate per item per cost, until you get the matching number. That is the only way to know at what point the mismatch occur. It has something to do with cash accounting versus how manager treat inventory as accrual.

[acecombat2]

I think I got the hint.

By right Manager Treat Sales Invoice to reduce the Stock on hand.

What if. You’re using Sales Invoice putting negative amount of value or stock count as to offset which unneeded. Lookup All the Sales invoices that has negative amount in value or by stock count which using the inventory account.

If there is no amount are in negative in Sales Invoice, Search in Purchase Invoices.

The only time that the inventory and its value does not match is when the value is negative and the stock count is positive and vice versa.

[Tut]

@d3mad

selling all my stock to write it off my books.

A write-off should have been done with an inventory write-off, not a sales invoice. But you are not really writing anything off. You’re trying to correct earlier mistakes with application of tax codes.

@d3mad

Because I’d recorded GST for all the sales, I created a sales invoice where I sell these without GST

It seems to me that, regardless of what your cash register does, the entry into Manager could have been separated into items subject to GST and those that are not. The juices would have just been entered as though the tax-inclusive amount was the unit price, with no tax code applied. It looks like what you’ve done is apply GST on zero-value line items, which will have no effect.

Ultimately, I think the easiest way to resolve things will be to delete and re-enter transactions.

[d3mad]

@Tut

Ultimately, I think the easiest way to resolve things will be to delete and re-enter transactions.

I am thinking that too

[d3mad]

I have spent a lot of time looking at this over the last few days and I think this is a bug in the calculation of the value of inventory stock on hand as it relates to cash accounting.

In short, inventory on hand value is not adjusted unless a payment exists for the sales invoice it is associated with. Regardless of whatever payment is required, unless a payment (of any amount other than zero) is associated with that invoice, inventory values are not adjusted. I use the word “value” here because it does appear “quantity” IS adjusted, just not value.

Here’s a couple of pics to demonstrate what I mean:

#1 the invoice is paid in full, (but no payment is attached to the sale)

but the value of inventory on hand doesn’t change (qty does*, but not the value)

#2 the invoice is still paid in full, and/but only has a 1 cent payment

doing this, fixes the inventory on hand value under summary view using cash accounting

---

From what I can see, it appears as though manager will only modify the value of inventory stock if the associated sales invoice has a payment associated with it. If I leave a few cents off the reversed line item at the bottom and make a payment in that amount, the inventory value vanishes (and balances correctly) from the summary screen.

Shouldn’t a sales invoice that reduces stock count actually reduce the value of that inventory stock on hand regardless of whether a payment is made or not? (especially, as in my case, the sales invoice balances to zero). And why does that 1 cent make any difference? It’s modifying the value of stock by hundreds of dollars.

meaning: manager is using the payment as a trigger to record changes in value of inventory stock

Regardless of whether a payment is made or not, ie in either of the cases above, the inventory QTY is correct in both cases.

Is that not a bug in the implementation of a sales invoice and inventory tracking? Notwithstanding the fact that I am doing it unconventionally, I can’t help but feel that is a bug, the fact that a one cent payment can change the value of inventory by hundreds of dollars.

In my case, that one cent FIXES how I expected the cash account to appear.

[d3mad]

Notwithstanding everything above, that was easy to do because there were many changes in one invoice and there were things that appeared ONLY in that invoice. I was going to just do the same for everything else to get it to marry up.

However, under cash accounting, there is nothing to click to edit the invoice and so it makes navigating to each invoice almost impossible. And I have hundreds of them.

nothing is clickable

This is only a problem under cash accounting, it balances under accrual, but my accountant is adamant I should be using cash accounting. I just cant be sure the reports I give her are correct if the summary screen is not correct.

Anyway, @lubos, I’d appreciate it if you take a look at the post immediately above this one.

[Joe91]

I’d change accountant! Accrual accounting gives a much better picture of your business

[Tut]

@d3mad

inventory on hand value is not adjusted unless a payment exists for the sales invoice

That is the downside of cash basis accounting. The transaction is not considered to have occurred on the basis of invoices, but only when the corresponding receipt or payment is recorded. This is why many jurisdictions prohibit cash basis accounting when inventory is involved.

@d3mad

#1 the invoice is paid in full, (but no payment is attached to the sale)

This is a contradiction under normal conditions. But you have interposed your artificial “Stocktake” invoice. Until you get rid of that, your problem will persist.

@d3mad

it appears as though manager will only modify the value of inventory stock if the associated sales invoice has a payment associated with it.

True, under cash basis accounting.

As I have said in other public and private posts, you’ve done a few things incorrectly. That makes it virtually impossible to follow your situation remotely. Until those problems get cleared up, I think your energies would best be directed to resolving the underlying problem rather than trying to make the bandage work.

I also concur with @joe’s recommendation. Accrual accounting gives a better picture of both performance (P&L) and position (BS).

[lubos]

@d3mad

the invoice is paid in full, (but no payment is attached to the sale) but the value of inventory on hand doesn’t change (qty does*, but not the value)

I’d say this is a bug. Invoice that comes to total of zero should be introduced into cash-basis general ledger right away. However, for your type of business you should not be using Sales Invoices tab at all. You don’t have debtors.

Instead of sales invoices, you should use Inventory Write-off tab. When you do stocktake, figure out how much inventory is “missing” (either due to sales, theft or damage) and write it off to your Sales account. That’s it.

@d3mad

However, under cash accounting, there is nothing to click to edit the invoice and so it makes navigating to each invoice almost impossible. And I have hundreds of them.

Yeah, this is still unsolved problem. Mostly because it’s not really invoice which made entry into general ledger, it’s transaction which paid for the invoice. I do want to improve the clickability on cash-basis but don’t have good solution yet.

@d3mad

my accountant is adamant I should be using cash accounting

I’d say that’s correct. If you are paying taxes on cash-basis, you probably don’t care about financial statements on accrual-basis.

@d3mad

I just cant be sure the reports I give her are correct if the summary screen is not correct.

Do not give your accountant any reports until your figures are correct. I will be looking into this issue of zero-total invoices on cash-basis. This would be a bug.