Hello,

I have just completed my first financial year end using Solar Accounts. I have followed the steps required to begin a new financial year, and noticed that the software made several "EOY" entries to clear down the P&L, as I would expect.

However, have noticed that there is an automated entry to "Closing Stock / Work in Progress" but not corresponding entry to "Opening Stock / Work in Progress". Certainly the tax office will expect my Closing Stock for the previous year to = the Opening Stock for the next year.

How might I make this adjustment manually? The EOY adjustment journal looks rather complicated, but I'm guessing I need to Debit Opening Stock and Credit Closing Stock by the same amount to start the year off?

I'm not running perpetual inventory, just expensing inventory purchase costs straight to COGS as I go, with a quarterly stock take sweep between Closing Inv and Purchasing costs as necessary.

Some advice please?

Cheers

Hi Angel,

The End of Year transaction is really just a journal entry that changes the balance of the income and expense accounts to zero and increases the balance of the Retained Earnings account.

Unfortunately I'm not familiar with the approach to tracking stock which uses two accounts called 'Opening Stock' and 'Closing Stock'. You will need to ask your accountant which accounts need to be credited/debited in your case. To record a journal entry in Solar Accounts click menu File > New > General Transaction and enter the account being credited in the From Account field and the account being debited in the To Account field.

Regards,

Hello there,

If the only objective of the EOY transaction is to "clear all P&L entries to Retained Earnings" then that's fine, I understand what I need to do to counter it. Thank you.

FYI - Maintaining Opening & Closing Stock within COGS in the P&L is fairly straight forward, so some people choose to do it this way to easily see the components of COGS throughout the year.

I do it this way:

A) - Entering stock when I buy it:
Dr P&L Stock Purchase Costs
Dr B/S Stock Assets
Cr B/S Cash (or in my case, Directors Loan Account)
Cr P&L Closing Stock

B - Recording monthly usage via Stock-take
Dr P&L Closing Stock
Cr B/S Stock Assets

C - This means to start the year off (and counter the EOY thing) I need to:
Dr P&L Opening Stock
Cr P&L Closing Stock

Easy as pie. I do it this way because I'm not doing simple buying/selling finished goods. I'm buying parts, making them into something else, then selling the something else. To prevent my 'usage' adjustments from being tiresomely complicated, I therefore chose the above method.

Hope this makes sense. Thanks for clarifying the EOY adjustment.

Cheers