Inventory General Journal Entry

Good day, 

I was wondering if someone could please help me with my predicament . I was asked to record inventory but i've never done it before in Sage. I understand beg + purchase - Ending = inventory. I have debited the beginning inventory and I recorded all of the purchase invoices for the week. I was just wondering what the journal entry would be to complete this entry would be.

Here is what we have. 

Beg $7,585.66

Purchases - $4,775.66

Ending - $6,251.85

Variance = $4,455.16

Thank you for your help!!

Parents
  • 0

    If you are not using the Inventory Module in Sage 50 then all purchases would be a debit to Purchase (a 5xxx account) and credit to the vendor's A/P account. At the end of a period, after an inventory count is completed, the actual inventory value would be calculated. Then the entry to update the inventory asset account would be:

    Inventory Asset (beginning) credit 

    Inventory Asset (ending) debit

    Purchases (5xxx) debit or credit to balance entry

    This works for a periodic inventory control (annual, semi, quarterly and maybe monthly) all other periods should be using the inventory module with a monitoring inventory count completed monthly or quarterly and a full count at least annually.

  • 0 in reply to Alwyn

    Hey Alwyn, 

    Thank you very much for the response!

    I am not currently using the inventory module. Maybe I should take a lesson on that one?

    We are currently only using categories for inventory not tracking each individual item. All of those items are tracked in our point of sales system. The categories we use are: 

    Oysters, meats, seafoods, produce, and other

    I will use produce as an example of what we counted in a week. 

    Opening - $1495

    Purchases - $1733

    Ending - $1607

    So my entry would be

    CR 1500 - 1495

    DR 1500- 1607

    CR - Would this go in with my actual purchases invoices that I recorded? Or would I make a separate COGS account for adjusted produce? I feel like if I put it in with my purchases it wont be correct for the year end of what we actually purchased or am I wrong?

    Thank you

Reply
  • 0 in reply to Alwyn

    Hey Alwyn, 

    Thank you very much for the response!

    I am not currently using the inventory module. Maybe I should take a lesson on that one?

    We are currently only using categories for inventory not tracking each individual item. All of those items are tracked in our point of sales system. The categories we use are: 

    Oysters, meats, seafoods, produce, and other

    I will use produce as an example of what we counted in a week. 

    Opening - $1495

    Purchases - $1733

    Ending - $1607

    So my entry would be

    CR 1500 - 1495

    DR 1500- 1607

    CR - Would this go in with my actual purchases invoices that I recorded? Or would I make a separate COGS account for adjusted produce? I feel like if I put it in with my purchases it wont be correct for the year end of what we actually purchased or am I wrong?

    Thank you

Children
  • 0 in reply to Weston Bennett

    The credit to purchases would reduce the total purchases for the period, however, you will also be showing an increase in your inventory asset. Yes, this is correct. The actual purchases affects the cash flow but not necessarily the COGS. If you make purchases, which should be a part of COGS, but have very low sales recorded then you would anticipate that you inventory would grow. By the same token, if you find your inventory is too high you would make fewer purchases even with a growth in sales. What you are trying to accomplish is to match your purchases to sales and this entry would arrive at a close dollar value for the period.

    On your income statement at the end of the year you only want to show the purchases (value) for the product used to match the sales. All other inventory purchases (value) will increase or decrease the balance sheet Inventory asset.

  • 0 in reply to Alwyn

    Awesome thank you so much for all of your help! You are the best!!