Inventory Items vs. incorrect Balance Sheet and P&L

Options
Gitta
Gitta Member Posts: 9 ✭

My client is tracking inventory therefore the Balance Sheet and the P & L is not correct. How do you correct the figures, is there an easy GJ entry? Thanks.

Best Answer

  • Acctd4
    Acctd4 Accredited Partner Posts: 3,592 Reckon Accounts Hosted Expert Reckon Accounts Hosted Expert
    edited September 2023 Answer βœ“
    Options

    If the Balance Sheet is negative & the COGS is wrong, it sounds like there' might be a problem with some Item configurations &/or accuracy of Inventory tracking as it shouldn't need ongoing adjusting by default 😬

    However, an annual stock take is usually recommended/required, at which point any adjustments can be made via here:

    There's even a Stock Take Worksheet that can be printed & used under the default Reports dropdown menu > Inventory:

    ☺️

    Shaz Hughes Dip(Fin) ACQ NSW, MICB

    *** Reckon Accredited Partner (AP) Bookkeeper - specialising EXCLUSIVELY in Reckon Accounts / Hosted ! ***

    * Regd BAS Agent (No: 92314 015)* ICB-Certified Bookkeeper* Snr Seasonal Tax Consultant since 2003 *

    Accounted 4 Bookkeeping Services

    Ballajura, WA

    shaz@accounted4.com.au

    https://accounted4.com.au

    (NB: Please give my post a Like or mark as Accepted Answer if I have been able to resolve your query as this helps others when seeking solutions!)

Answers

  • Acctd4
    Acctd4 Accredited Partner Posts: 3,592 Reckon Accounts Hosted Expert Reckon Accounts Hosted Expert
    Options

    Hi Gitta

    The Balance Sheet is reflecting the VALUE based on the average cost. The P&L is reflecting the actual income & expense/cost (amounts paid/received)

    The system works on an "Average Cost" method - The total cost of the items currently in stock divided by the number of items in stock.

    It recalculates the average cost of an item every time a purchase of more units of the item is recorded. It adds the cost of the new items to the cost of the old stock and then divides by the total number in stock altogether (eg of both new AND old items)

    Example

    You originally bought 100 T-shirts at $ 5 each. When you have 10 shirts left in stock, you order 100 more shirts, but the price has gone up to $ 6 each. Here's how Reckon Accounts calculates the average cost:

    • The cost of your old stock is $ 50 (10 shirts x $ 5)
    • The cost of the new inventory is $ 600 (100 shirts x $ 6)
    • The combined cost of the old and new inventory is $ 650
    • The average cost of your entire inventory is $ 5.91 ($ 650 / 110 shirts)

    Shaz Hughes Dip(Fin) ACQ NSW, MICB

    *** Reckon Accredited Partner (AP) Bookkeeper - specialising EXCLUSIVELY in Reckon Accounts / Hosted ! ***

    * Regd BAS Agent (No: 92314 015)* ICB-Certified Bookkeeper* Snr Seasonal Tax Consultant since 2003 *

    Accounted 4 Bookkeeping Services

    Ballajura, WA

    shaz@accounted4.com.au

    https://accounted4.com.au

    (NB: Please give my post a Like or mark as Accepted Answer if I have been able to resolve your query as this helps others when seeking solutions!)
  • Gitta
    Gitta Member Posts: 9 ✭
    Options

    Hi Shaz, thank you for your answer. I know all that, but it drives me and my client nuts, that the Balance Sheet is negative !!!! and the Profit & Loss is also incorrect because of the Cost of Goods sold.

    I wish there would be a better solution or an adjustment. .... Or can it be adjusted at the end of the Financial Year with "Stock on Hand" to get at least a correct figure for the accountant?

  • Gitta
    Gitta Member Posts: 9 ✭
    Options

    Thank you Schaz, I think my client will need to do a stocktake as there are a lot of negative numbers in there. Hopefully that will fix the Balance Sheet and the P & L.