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How to show a more balanced P&L

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  • # 119493

Hi all

I have a client who makes large purchases of stock 3-4 times a year and then sells his end product.  Unofrtunately, these large purchases of stock shows a loss on his P&L in the months when he makes the purchases and then he builds up a profit in the other months.  He would like to be able to spread the "loss" across the profitable months to make the P&L more "balanced".  Is there a way to do this?  Any thoughts gratefully received.

Thank you.

Fiona



Edited at 10 Feb 2021 11:05 AM GMT

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  • # 119494

Hello,

 

Could you not do a stock take at the end of each month and then make the adjustment with inventory on the balance sheet. Like you would at year-end. This would then show the cost of sales against when the sales have actually been made. So the P&L is a true reflection of that month.

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  • # 119495

Hi,

 

I wouldn't attempt to do this with bookkeeping software. I would produce management accounts on this occasion where you can then spread the stock/pirchases however you see fit.

Toodle pip

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  • # 119496

Thank you for your suggestions.  Doing a stock take each month would probably work.

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