Inventory adjustments

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Inventory adjustments - I have a client that has created an inventory adjustment to correct the stock on hand figures for a business she purchased. This has created an a negative adjustment in COGS and therefore her profit is now up by $240,000. Do we just need to change the date of the inventory adjustment to prior to her purchasing the business?
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Jodie Jackson

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Posted 4 months ago

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John Graetz

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Jodie.  As this an Accounting issue, rather than a Reckon issue, it is something that you need to take up with your Accountant who has the expertise to deal with it.
John L G
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Jodie Jackson

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Hi John, I didn't word my question very well. I guess I was really wondering if she had entered the stock on hand values as opening stock numbers, when she added the items into Reckon, prior to the business starting to trade, would this have made any difference to the profit and loss report.  
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John Graetz

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Sorry, Jodie - I have no expertise in this area.  Still sounding like a question for your accountant to unravel.
John L G
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Heather Sanders, Accredited Partner

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I would suggest changing the the prior to the start date. Also check the choice of account in the adjustment Entry. As John stated make sure the accountant is aware.
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Shayne McNamara

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I think the easiest is to try changing the date and see what happens.  If it corrects the problem then you have your answer.  If not you can always change it back .  Without knowing more about the nature of the reason for the stock value change it is difficult to help more.  I suspect that the agreed value of the stock was a reduced value to the book value so theoretically you would have a reduced COGS and severely reduced GP at the end of the month the stock adjustment.  It does seem really odd though as normally if you buy a business you would start your accounting from scratch and enter the stock at the purchased value.  

If she has done this and later found that the opening stock figures were wrong then talk with a specialist but I think the opening stock value needs to be adjusted and I think (not 100% sure) that you can't change the opening values in Reckon and this can only be done by journal.  Others may know this for sure though.   Accounting knowledge and input would help though as important you get it right.