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Re: Starting inventory

On Fri, 2006-11-10 at 10:08 -0600, Charley Tiggs wrote:
> I'm in the process of moving a client over from a system that wasn't
> as 
> accurate as it should be and has caused all sorts of problems.
> Instead 
> of trying to move over invoices and old orders and the like to try to 
> get inventory started, we would like to start from the ground and
> work 
> from there.
> My question:  What is the correct way to enter the starting inventory 
> for each part into LedgerSMB?

The consensus with SQL Ledger was that if you had initial inventory the
right way is to prepare 2 transactions:

1. Your normal Opening GL transaction to setup existing
assets/liabilities and current income and expenses already booked in the
previous system in the current accounting period. Leave out any current
inventory from this transaction and reduce an equity account by the cost
of the inventory to balance the journal entry.

2. A purchase invoice with the owner (either the corporation or the real
owner in the case of a sole proprietor) as the vendor, either 1 line per
part number with the average cost from the previous accounting system or
multiple lines per part number with the real cost of the items (see
example) and pay the invoice in full from the reduced equity account.

Average Cost:
PN     Qty    Description           Cost         Extended
PART     10   Widget                 7.20              72.00
                                           Subtotal:   72.00

Actual Cost:
PN     Qty    Description           Cost         Extended
PART      2   Widget                 7.90              15.80
PART      2   Widget                 6.50              13.00
PART      6   Widget                 7.20              43.20
                                           Subtotal:   72.00

The third optional step is to leave any AR/AP transactions that are open
in the old system out of the opening journal entry and re-enter them
with the correct Customer/Vendor so that you can apply payments to them
as usual instead of having to account for open AR/AP transactions from
the old system differently (with GL entries) than ones entered directly.

Tony Fraser
Sybaspace Internet Solutions                        System Administrator
phone: (250) 246-5368                                fax: (250) 246-5398