Item Adjustment

SOLVED

Hi everyone,

We have started a fresh in Jan1 2022 to Sage accounting with all opening balances from 2021.

When we entered the inventory opening balances total values of each item were entered correctly but the quantities were duplicated for some reason so the same correct total inventory value was divided into a bigger number resulting in half average cost for those which are wrong.

There is no transaction on any of these wrong quantity items and basically our TB and Income statement is totally correct because the total values are correct, but when I invoice obviously this brings half COGS and when I finish the physical stock, there will still be stock showing in the inventory.

My question is if I do an item adjustment by increasing the average cost by doubling and reducing the quantity by half, does it still affect the item adjustment account and post COGS on P&L?

i.e. total cost of an item is 1000 and opening quantity in hand was entered 4, so each item average cost is 250. Now if I adjust the quantity as 2 and average cost as 500, theoretically total inventory value will be the same, does this affect any other COGS and/or supplier balance accounts?

I don't want to register item adjustment COGS as our quantity in hand is correct and there is no theft/broken etc..adjustment, this is just to correct the system with correct average cost and quantity.

Thanks.

Cem 

  • 0

    I would like amend my question,

    instead of item adjustment, I would consider item opening balance adjustment as the subject items have no movement since opening.

    Question still stands, what is the best way to do the correction without affecting any cost account since there is no transaction on these items and since we want to have the same inventory value. 

  • 0 in reply to Cem Gonul

    Good day, Cem,

    Yes, you are correct. You can adjust the Opening Item Quantity as well as the Opening Cost when going to Items | Specials | Adjust Item Opening Balance. This will not show on the Profit and Loss Report. 

    Only when processing Item Adjust and or Adjust Item Selling Price will write on the Profit and Loss Report as an Item Adjustment, but will not affect the cost of Sales. 

    Kindly make use of the Demo Company to test the above.

    Regards

    P.S. Please could you kindly verify and let us know that this solution worked. You can do this by marking this reply as a Verified answer so that the rest of the Community can benefit from this.

    To verify an answer simply go to your post and click “More” > “Verify Answer

  • 0 in reply to Nokuthula M

    Dear Sir,

    When we try on the demo company, changing item opening balance does not affect the inventory qty and when we try to run item adjustment it allows us to adjust only the average cost but not the quantity, probably because there are transactions on all registers items.

    In our case, all are opening balances (even supplier openings are just a bulk number rather than invoices) so there is no supplier invoice linked to existing opening quantity and there is also not any sales on these items we want to correct.

    In our case, both item opening adjustment and item adjustment allows us to change both average cost and quantity.

    If I use item opening balance and change the quantity, does it directly affect the quantity on hand?
    If I use item adjustment I know it affect the inventory on hand immediately.

    Does it make a difference which method I use?

    Cem

  • +1 in reply to Cem Gonul
    verified answer

    Good evening, Cem 

    I am not quite you why the adjusted Opening balance quantity is not updating on your end. 

    Please see the screenshots below. 

    The above does not affect the Profit and Loss Report. 

    I have now adjusted the Item Opening Cost balance to R750, this too updated accordingly. Please see the below screenshots.

    Regards

    P.S. Please could you kindly verify and let us know that this solution worked. You can do this by marking this reply as a Verified answer so that the rest of the Community can benefit from this.

    To verify an answer simply go to your post and click “More” > “Verify Answer

  • 0 in reply to Nokuthula M

    Actually edit item worked perfectly

    now stocks and average costs are all correct and no financial effect at all.

    we have also invoiced as per correct cost and all went well.

    thanks alot for the headsup

  • 0 in reply to Cem Gonul

    Good day, Cem, 

    I am glad that all worked perfectly.

    Have a great weekend and keep safe. 

    Regards