I’m doing my end of year and am struggling with closing stock. Here’s what I’ve done:
- Logged purchase of stock as ‘General Purchases’ throughout the year
- Recorded stock value at end of year (£19k) and moved this amount from General Purchases to (5201) Closing stock
I thought this would also show that I have £19k in stock as an asset (and therefore part of my profit), but I can’t see this in Balance Sheet or P&L. Have I done something wrong or do I now need to manually move the £19k from (5201) Closing stock into (1001) Stock?
Your step 2 looks wrong to me, what you should actually do is leave General Purchases alone and just journal “closing stock” to “stock” (i.e. credit closing stock 5201 and debit stock 1001). This will leave your total cost of sales for the year as the total general purchases minus the value of closing stock, and shows the stock held at year end as an asset on your balance sheet.
On the first day of your next accounting year you move “stock” to “opening stock” (Cr 1001, Dr 5200), then at the end of that year move “closing stock” to “stock” again. This makes your cost of sales for the second year the opening stock value plus purchases minus closing stock.