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End of Period Inventory Journals

Overview

If you run Vinsight as your master record for inventory, then you can also use our reporting to give you inventory valuations and reports on changes in valuations due to things like sales, purchases and production.

In this document:

Ensure Opening Balances Are Accurate

1.   Finalize any Outstanding Despatches, Receipts and Operations to ensure inventory levels reflect all the work you have done to date.  For more information read  Inventory, Valuation and Reporting.

2.   Ensure your stock levels are accurate (if not, adjust using a stock take)

3.   Ensure  an accurate Standard Cost is set for each Stock Item.

4.   Run the Stock On Hand Report (Reports > Account > Stock On Hand) at the end of each month.  This will report your stock valuation on the day that you run it, thereby giving you your Closing Valuation for the current month, and, once adjusted, your Opening Balance for the next month.

5.  If you are using the production App you will also want to check the Bulk Work in Progress Asset Ledgers against your Bulk Work in Progress in Vinsight.

Your accounting system’s inventory current asset ledgers should still show the closing balance from the previous month as their opening balance for this month, (possibly already reflecting purchases posted to the asset ledgers).

We will use the basic accounting principle:

Opening Balance – Sales + Purchases (+ Produced) = Closing Balance

Post End of Period Inventory Journals:

Assuming you did the previous month’s adjustments correctly, your opening balance should be accurate. You can now proceed to do any necessary journals:

1.  Adjust for Sales

To adjust for sales we need to run the Cost of Goods Sold (detailed) Report” for the period. (Reports > Account >Cost of Goods Sold (detailed)).

This tells us the amount that we have to reduce our Asset Ledger and increase our Cost of Sales expense by.  Each stock item sold must have the Asset Ledger and the Standard Cost set.   If using Xero, your Vinsight Ledger Codes should match your Xero Ledger Codes.   See Posting Asset Ledgers to Xero for more details.

2.  Purchases

Unlike sales, if you have the Asset Ledger Code set and post a purchase to Xero, then the purchase price will post to the Asset Ledger in Xero automatically.  The only variance might be if the Purchase Price (posted to Xero) varies significantly from the Standard Cost, (used in the stock valuation).  You can use the Purchases by Product Report to help identify this.  (Reports > Buy > Purchases By Product).

3.  Production

Use the Bottling Journals (Reports > Account > Bottling Journals) to journal your Work In Progress and Dry Goods to your Finished Goods Ledger.  Run the report and ensure all your Asset Ledger Codes are there.  If any are listed as ‘missing’ fix these before posting the report to Xero.   For more information see Posting Asset Journals to Xero.

Review

Once posted, in theory your closing balance in your accounting system should match the current Stock On Hand Valuation report from Vinsight effectively validating the equation “Opening Balance – Sales + Purchases + Produced = Closing Balance”.

You should audit any differences and, in the first instance, find and remedy any key differences at source.  If needed, journal a variance to bring them into balance.