Difference between revisions of "Internal Accounting, Example Promotional Stock"

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{{Review}}{{Incomplete}}
 
 
== Summary ==
 
== Summary ==
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This article shows an example of how to deal with promotional stock that is given away for sales prospecting purposes. It assumes that you can create nominal ledger centre and understand how to invoice stock from Point of Sale.
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This article shows an example of how to deal with items given away for promotional purposes. It assumes that you can create nominal ledger centre and understand how to invoice stock from Point of Sale.
  
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*[[How do I Create a Nominal Code?]]
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== More Information ==
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*[[Selling Stock at Point of Sale]]
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If you are unsure about how to create nominal centres and invoice stock from Point of Sale, please review these articles.
 +
* [[How do I create a nominal code?]]
 +
* [[Selling stock at point of sale]]
  
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==The Philosophy Behind Catalyst Internal Accounts==
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=== The Philosophy Behind Catalyst Internal Accounts ===
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'''Move stock internally between departments, attributing the Cost against a department and the flexibility to show an internal profit, if required.
 
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== Details ==
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'''"Move stock internally between departments, attributing the Cost against a department and the flexibility to show an internal profit, if required."'''
 +
 
 +
==== Details ====
 
In this example we are going to give away some promotional stock to the value of £100.00 showing no profit on the internal movement, thus charging the movement at cost.
 
In this example we are going to give away some promotional stock to the value of £100.00 showing no profit on the internal movement, thus charging the movement at cost.
  
 +
=== System Goals for the movement of stock ===
 +
 +
* Reduce the stock quantity when an item is given to a potential customer.
 +
* Show the cost of this against the Clothing & Merchandising dept.
 +
 +
==== Set-up ====
 +
 +
* Create a Sales Ledger account called "Internal Promotional Sales", e.g. {{DataPrompt|INT001}}.
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 +
On the {{DataPrompt|Invoicing Tab}}
 +
 +
* Make the account VAT exempt.
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* Make the Centre Modifier {{DataPrompt|"I"}}, this means...
 +
 +
{{Note|When an invoice is produced onto this account the sales centre stamped onto the invoice will be the default centre stamped onto the stock code, stock group or if they're not set, the stock settings. In this example we shall use centre ''100, Parts Sales Retail'' that links to nominal centres ''11100'' ''Parts Sales Retail'' which is stamped on the stock code.
 +
 +
When the month end updates the nominal, the system looks at the centre modifier and if it is set, it then checks the settings  for how to proceed with the update, because the concept of the centre modifier is to add the modifier character to a position on the centre it is to update. So, in this example the system would add the letter ''I'' into the sixth position of the nominal code, therefore updating centre ''11100I'' ''Parts Sales Internal''}}.
  
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* Set the Internal Flag to ''YES''.
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* Create a profit & loss nominal centre, cost of sales, called ''Promotional Costs'' and assign this to the default payment centre. Centre {{DataValue|12200I Promotional Costs}}.
  
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===System Goals for the movement of stock===
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* Set the {{DataPrompt|Cash Sales:}} flag to {{DataValue|Yes}} so that the internal debtor is cleared immediately.
  
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*Reduced the stock quantity when an item is given to a potential customer.
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On the {{DataPrompt|Group/Analysis Tab}}
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*Show the cost of this against the Clothing & Merchandising dept.
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* Make the account group {{DataPrompt|INT}}
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====Set-up====
 
−
 
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*Create sales ledger account called "Internal Promotional Sales" {{DataPrompt|INT001}}
 
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*Make the account VAT exempt
 
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*Make the Centre Modifier {{DataPrompt|"I"}}, this means...
 
−
 
−
{{Note|When an invoice is produced onto this account the sales centre stamped onto the invoice, will be the default centre stamped onto the stock code, stock code group or if they're not set; the stock parameters. In this example we shall use centre ''100, Parts Sales Retail'' that assigns to nominal centres ''11100'' ''Parts Sales Retail'' that was stamped onto the stock code.
 
  
 +
On the {{DataPrompt|Stock Tab}}
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* Set the {{DataPrompt|Cost Of Sales}} code to be {{DataValue|12200I}} - Promotional Costs.
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* Change the Account Pricing to charge at zero.
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{{Note|If you unsure how to set the account pricing, please review the following article
 +
* [[How do I Set Account Pricing for a Customer?]]}}
  
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When the month end updates the nominal, the system looks at the centre modifier and if it is set, it then checks the parameters for how to proceed with the update. Because the concept of the centre modifier is add the modifier character to a position on the centre it is to update. So, in this example the system would add the letter ''I'' into the sixth position of the nominal code, therefore updating centre ''11100I'' ''Parts Sales Internal''}}
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==== The Process ====
  
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* Using Stock Control, Point of Sale, invoice the item of stock at zero price to the customer against sales ledger account {{DataPrompt|INT001}}
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*Make the account group {{DataPrompt|INT}}
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* The Payment screen will appear as usual but default the payment type to ''12200I Promotional Costs''.
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*Create a profit & loss nominal centre, cost of sales, called ''Promotional Cost of Sales'' and assign this to the default payment centre of the sales
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* Click {{Button|Post}} to complete the transaction.
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ledger account.  
 
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    Centre 12200 Promotional Cost of Sales.   
 
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*Change the CASH SALES flag to {{DataPrompt|NO}} if you want accounts department to clear the debtor and the end of the month or '''YES''' if you would like the account to be cleared at the point the invoice is created.
 
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*Change the Account Pricing to charge at cost.
 
  
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*[[How do I Set Account Pricing for a Customer?]]
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==== Accounting Entries ====
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====The Process====
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<pre>Sales Ledger Invoice
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  CR  11100I    Parts Sales Internal             0.00
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*Using Stock Control, Point of Sale, Invoice the item of stock to the customer against sales ledger account {{DataPrompt|INT001}}
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  DB  Z994      Debtors                         0.00
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*If the CASH SALES flag is set to NO then the accounts department should clear the debtor as part of their month end procedure.
 
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*If the CASH SALES flag is set to YES, the system will prompt the payment screen as usual but default the payment to ''12200 Promotional Cost of Sales''
 
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====Accounting Entries====
 
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'''Sales Ledger Invoice'''
 
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  CR  11100I    Parts Sales Internal         -100.00
 
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  DB  Z994      Debtors                       100.00
 
  
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Sales Ledger Receipt
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'''Sales Ledger Receipt'''
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  CR  Z994      Debtors                         0.00
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  CR  Z994      Debtors                       -100.00
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  DB  12200I    Promotional Cost of Sales       0.00
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  DB  12200      Promotional Cost of Sales     100.00
 
  
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Stock Movement
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'''Stock Movement'''
 
 
  CR  Z922      Stock Value                  -100.00
 
  CR  Z922      Stock Value                  -100.00
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  DB  11200I     Parts Sales Internal COS      100.00
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  DB  12200I     Promotional Costs              100.00
  
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COS
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                                          ==========
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    12200I                                  -100.00    Promotional Cost of  Sales
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                                          ==========
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NETT LOSS                                    -100.00</pre>
  
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The above results in a loss on the profit and loss for the promotional costs.
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'''SALES'''
 
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    11100I                          100.00    Parts Sales Internal
 
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'''COS'''                            ==========
 
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    11200I                        -100.00    Parts COS Internal
 
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    12200                          -100.00    Promotional Cost of  Sales
 
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                                ==========
 
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'''NETT LOSS'''                        -100.00
 
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==SUMMARY==
 
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The above results in a loss on the profit and loss for the promotional cost of sale because, Parts Sales Int and Parts COS Int should be contra'd off.  
 
  
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If the nominal codes are coded appropriately (by department) producing management accounts based in excel to show it more effectively, can be achieved.
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== See also ==
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* [[Internal Accounting]]
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* [[Recommended accounting routines]]
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* [[Stock integration to the nominal ledger]]
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* [[Unit integration to nominal ledger]]
  
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{{KB_Tags|Accounting}}{{ZN_Accounts}}
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{{KB_Tags|internal, accounting}}
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{{ZN_Accounts}}

Latest revision as of 05:30, 17 April 2019

Summary

This article shows an example of how to deal with items given away for promotional purposes. It assumes that you can create nominal ledger centre and understand how to invoice stock from Point of Sale.

More Information

If you are unsure about how to create nominal centres and invoice stock from Point of Sale, please review these articles.

The Philosophy Behind Catalyst Internal Accounts

"Move stock internally between departments, attributing the Cost against a department and the flexibility to show an internal profit, if required."

Details

In this example we are going to give away some promotional stock to the value of £100.00 showing no profit on the internal movement, thus charging the movement at cost.

System Goals for the movement of stock

  • Reduce the stock quantity when an item is given to a potential customer.
  • Show the cost of this against the Clothing & Merchandising dept.

Set-up

  • Create a Sales Ledger account called "Internal Promotional Sales", e.g. "INT001".

On the "Invoicing Tab"

  • Make the account VAT exempt.
  • Make the Centre Modifier ""I"", this means...
When an invoice is produced onto this account the sales centre stamped onto the invoice will be the default centre stamped onto the stock code, stock group or if they're not set, the stock settings. In this example we shall use centre 100, Parts Sales Retail that links to nominal centres 11100 Parts Sales Retail which is stamped on the stock code. When the month end updates the nominal, the system looks at the centre modifier and if it is set, it then checks the settings for how to proceed with the update, because the concept of the centre modifier is to add the modifier character to a position on the centre it is to update. So, in this example the system would add the letter I into the sixth position of the nominal code, therefore updating centre 11100I Parts Sales Internal

.

  • Set the Internal Flag to YES.
  • Create a profit & loss nominal centre, cost of sales, called Promotional Costs and assign this to the default payment centre. Centre '12200I Promotional Costs'.
  • Set the "Cash Sales:" flag to 'Yes' so that the internal debtor is cleared immediately.

On the "Group/Analysis Tab"

  • Make the account group "INT"

On the "Stock Tab"

  • Set the "Cost Of Sales" code to be '12200I' - Promotional Costs.
  • Change the Account Pricing to charge at zero.
If you unsure how to set the account pricing, please review the following article

The Process

  • Using Stock Control, Point of Sale, invoice the item of stock at zero price to the customer against sales ledger account "INT001"
  • The Payment screen will appear as usual but default the payment type to 12200I Promotional Costs.
  • Click [Post] to complete the transaction.

Accounting Entries

Sales Ledger Invoice
 CR  11100I     Parts Sales Internal             0.00
 DB  Z994       Debtors                          0.00

Sales Ledger Receipt
 CR  Z994       Debtors                          0.00
 DB  12200I     Promotional Cost of Sales        0.00

Stock Movement
 CR  Z922       Stock Value                   -100.00
 DB  12200I     Promotional Costs              100.00

COS
                                           ==========
     12200I                                   -100.00     Promotional Cost of  Sales
                                           ==========
NETT LOSS                                     -100.00

The above results in a loss on the profit and loss for the promotional costs.

See also


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