Inventory Modified Instructions
Starting Balances > Inventory
Starting Balance Inventory Instructions
If you need to set up Inventory Items Quantity
Owned and Average Cost starting balances you can use a Journal Entry.Debit Entry
Select the account
Inventory On Hand if using the Perpetual Inventory Method or Inventory - cost if using the Periodic Inventory Method, then the inventory item, and lastly enter the quantity and total cost.Credit Entry
The offsetting balance is posted to the
Retained Earnings account.Perpetual Method
Periodic Method
Note: Column - Item and Column - Qty check boxes need to be checked
After entering your items, if using the Periodic Inventory Method and the Accrual Basis of Accounting you need to go to Revalue your inventory which calculates and assigns the average cost to the items and updates the Balance Sheet Inventory Amount. The average cost is calculated by dividing total cost by quantity.
The latest version is streamlined workflow when using periodic inventory revaluation.
In the past, Going to Reports tab, creating a revaluation worksheet, then viewing it, then copying results to new Inventory Revaluation etc. It’s too many steps.
In the latest version, the number of steps has been greatly reduced.
If you have Average Cost column visible under Inventory Items tab, you will see new Recalculate button above the column name.
Clicking on the button will recalculate average costs and if they are different, then you will see the following screen.
To accept changes, click Batch Update button. This will create (or update) inventory revaluation entries under Settings tab.
This feature will also work when drilling-down into Inventory on hand account within Summary tab or within financial statements. This allows to recalculate average costs as of the report date.
Currently the recalculation is using FIFO (first in first out) method but the plan is to support other methods too. This will allow to switch between methods based on business requirements.
Starting Balances - Settings
Manager has also added Starting Balances in the Settings Section.
If using the Cash Basis of Accounting do not revalue your Inventory. Inventory amounts are not used for the Cash Basis; however, inventory quantities are maintained.
Manager Instructions state that you need to adjust your inventory due to how beginning unpaid sales and purchase invoices are entered. If you follow my revised instructions for entering unpaid Sales Invoices and Purchase Invoices, no adjustments are needed.