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Which nominal a/c does the o/stock go?

  • 8 posts
  • # 74117

Hi all,
 
I'm setting up the sage account for a new company, the new company is taking on the old company's stock. When putting into sage I do put it in as DR Opening stock 5200, CR Share capital (my new boss paid out of her personal account and doesn't want the business to pay her back) as opposed to DR Stock 1001 don't I? Please please can someone cornfirm either way? Its probably obvious but the responsibility of now putting what I've learned into practice for the first time and with noone at work to ask is making me worry a bit and massively overthink.

Thanks

Rachel

Edited at 06 Sep 2011 11:51 PM GMT

  • Member PM.Dip
  • Practice Licence
  • 194 posts
  • # 74282

Hi there,

As you are setting up a new Company you will only need to be inputting Balance Sheet codes, so if it was me I would Debit stock 1001 and Credit Capital Introduced.  But someone else might have a different view  :-)

Pauline

  • Fellow PM.Dip
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  • 33 posts
  • # 74345

I disagree, the DR should be to 5000 Purchases, and then at the end of the first year, or when the next stock take is taken, you DR the balance sheet 1001 to the closing stock figure, and the CR would be to the Profit and Loss a/c for Closing Stock.

This then places the correct stock figure onto the Balance Sheet for the financial year end, and the movement of stock is then correctly reflected in the profit and loss account.

The fact that the opening stock has been purchased from an old business is irrelevant, it should be treated as if it had been purchased by a supplier.

  • 82 posts
  • # 74350

Hi Rachel

I could be mistaken but it is my understanding that you could DR 1001 and CR Capital Introduced (as it is an opening balance).  You will then need to transfer the stock to the opening stock account 5200.  At year end, the closing stock is then transferred from the closing stock account back into 1001 so that the closing stock figure appears on the balance sheet.

If I'm mistaken I'm hoping someone will correct me on this! 

  • 698 posts
  • # 74407

Hi All

The first question as to how to deal with in my humble opinion is are they using sage to manage the stock.

The reason for the above question is Sage uses real time Stock holding rather than period end stock figures.

Kind Regards
Stuart

Edited at 16 Sep 2011 03:10 PM GMT

  • 8 posts
  • # 74437

Stuart Wildmansaid:

“Hi All

The first question as to how to deal with in my humble opinion is are they using sage to manage the stock.

The reason for the above question is Sage uses real time Stock holding rather than period end stock figures.

Kind Regards
Stuart

Edited at 16 Sep 2011 03:10 PM GMT


Hi Stuart,

We don't use Sage to manage the stock itself. We are a retail establishment and keep a separate stock control system that communicates with our tills. Deliveries go through it adjusting stock figures and the sales info provided by the tills automatically update the stock every night. 

Many thanks

Rachel

  • 698 posts
  • # 74448

Hi Rachel

The double entry for the stock that was bought when the company is a little more complicated.

You need to establish the purchase price of the company.

You will then have to create an opening balance journal debiting and crediting all the opening balance on the purchases you should then be left with an debit balance this is posted to Goodwill.

E.G. 

I pay £10,000 for a business buying Fixtures Fittings of say £3,000.00 Stock of say £5,000.00

In My opinion the double entry would be

DR Goodwill                   £2,000.00
DR Fixtures                    £3,000.00
Dr Stock                         £5,000.00
CR Capital Introduced £10,000.00

As always if you are dealing with a limited company this does get a bit more complex i.e. dealing with the capital introduced you would have to speak to thier accountant who dealt with the purchase of the business to ensure the correct split of Share Capital, Share premium and DLA.

This means the companies opening balance sheet as at the start of trading will be correct.

The reason I would not use the 5200 opening stock code is that when you bought the company you bought it's assets one of which was stock.

However this really does depend on how the eveything was bought as to how you would treat it.

In this instance I would point you squarely at their accountant.

I hope this make sense

Kind regards
Stuart

Edited at 19 Sep 2011 08:46 AM GMT

Edited at 19 Sep 2011 08:57 AM GMT

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