Stock integration to the nominal ledger
Contents
Details
There are two methods for the stock to integrate into the nominal ledger with only one that is the preferred and is set-up as standard with all new installs.
Method one - Automatic Cost of Sales (preferred)
This method works by the system posting journal entries into the accounts automatically for the whole process of an item of stock being booked into stock and subsequently then sold, right through to an item that is booked into stock, booked onto a job card and then subsequent then sold.
The process
There are five nominal centres that are used for the process.
- Z920 Stock Accruals
- Z921 Cost of Sales
- Z922 Stock Value
- Z923 Stock Adjustments
- 19703 Work in Progress
For this example lets say an item of stock has a cost value of 100.00
1. When the item is booked into stock the system makes the following entry into the nominal ledger,
Z920 Stock Accruals -100.00 CR Z922 Stock Value 100.00 DB
The above is has the effect that the Stock Value is increased by 100.00 and the other side of the journal has accrued for the purchase by crediting the Stock Accruals because we have not yet received the invoice.
2. When the item is sold the system makes the following entry into the nominal ledger,
Z922 Stock Value -100.00 CR Z921 Cost of Sales 100.00 DB
The above decreases the Stock Value at the latest FIFO cost price 100.00 and posts the other side of the journal to the cost of sale on the profit and loss.
 | The cost of sale centre on the profit and loss defaults to Z921. However each sale centre has an optional cost of sale centre that you can set-up which allows you to post cost of sale to a more appropriate centre that relates to the sale. This gives us a much more comprehensive set of management accounts. |
For example,
Sales Centre : 100
Description : Parts Sales
Revenue Type :
Allocate to Nominal Centre : 11100 Parts Sales
Nominal Centre Type : Profit & Loss - Sales Item
Cost of Sales Centre : 11200 Parts COS Work in Progress Centre :
3. When the purchase invoice arrives this is posted into purchase ledger to cost centre 200 Stock Purchases. This cost centre updates Z920 Stock Accruals. The following entry is made in the nominal ledger
Z920 Stock Accruals 100.00 DB Z999 Vat Control 17.50 DR Z993 Purchase Control -117.50 CB
The above clears the Z920 Stock Accruals, completing the process and creates a creditor for £117.50, which is the cost and VAT owed for the purchase.
| The stock accruals is cleared as long as the price that stock has been booked in agrees to the price that you have actually been invoiced and have subsequently posted into the stock accruals. |
Other Movements
1. If a stock item is booked onto a workshop jobcard, this is classed as Work In Progress and the system accounts for this type of movement with the following entry into the accounts,
Z922 Stock Value -100.00 CR 19703 Work In Progress 100.00 DB
When the jobcard is invoiced the stock will then be sold using the latest FIFO cost and the system will post the following journal,
19703 Work In Progress -100.00 CR Z921 Cost of Sales 100.00 DB
2. If an item has been adjusted the system accounts for this type of movement with the following entry into the accounts,
Z922 Stock Value -100.00 CR If the adjustment is negative Z923 Stock Adjustments 100.00 DB You have decreased the stock.
Z922 Stock Value 100.00 DB If the adjustment is positive Z923 Stock Adjustments -100.00 CR You have increased the stock.
