Internal Accounting, Example Promotional Stock
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Contents
Summary
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.
If you are unsure about how to create nominal centres and invoice stock from Point of Sale, please review the below 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
- Reduced 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" "INT001"
On the "Invoiving 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 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.
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- Set the Internal Flag to YES
- Create a profit & loss nominal centre, cost of sales, called Promotional Cost of Sales and assign this to the default payment centre.
Centre 12200 Promotional Cost of Sales.
- Change the CASH SALES flag to "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.
On the "Group/Analysis Tab"
- Make the account group "INT"
On the "Stock Tab"
- Change the Account Pricing to charge at cost.
| 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 to the customer against sales ledger account "INT001"
- If the CASH SALES flag is set to NO then the accounts department should clear the debtor as part of their month end procedure.
- 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
Accounting Entries
Sales Ledger Invoice
CR 11100I Parts Sales Internal -100.00 DB Z994 Debtors 100.00
Sales Ledger Receipt
CR Z994 Debtors -100.00 DB 12200 Promotional Cost of Sales 100.00
Stock Movement
CR Z922 Stock Value -100.00 DB 11200I Parts Sales Internal COS 100.00
SALES
11100I 100.00 Parts Sales Internal
COS ==========
11200I -100.00 Parts COS Internal
12200 -100.00 Promotional Cost of Sales
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NETT LOSS -100.00
SUMMARY
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.
If the nominal codes are coded appropriately (by department) producing management accounts based in excel to show it more effectively, can be achieved.
