[Question] Cost of Sales - consumables

[TraceyVN]

Hi,
We have a small business and we used items which we had on hand - purchased long before the business started. So therefore no receipts etc.,
In order to invoice our customers I created a inventory part number Consumables. However, this was not correct because I had no cost attached to the part number and looks like we have made 100% profit on this item but there is still a actual cost attached and my net profit is overstated.

So therefore I would like to do a journal to allocate an amount to cost of sales (I know which GL code to use here) but am unsure whether I must debit or credit Cost of Sales/Purchases and which contra account to use. My inventory on hand for this part is zero.

Please can someone advise if I am on the right track and just to clarify on the steps.
Thank you.

[Dave A]

This seems to be one of those posts where you wonder about the full story - and decide not to risk commenting or making a suggestion.

Perhaps the full acquisition history of these items might help prompt an answer, Tracey.

[TraceyVN]

Ok - not 100% understanding the reply.

I am still very new to Pastel and only after installing and setting up everything and doing transactions, did I discover that I should have done Take on balances for the Inventory control balance, but it would have meant basically doing everything from scratch. I therefore created a part number as CONS001 (Consumables) with no cost attached - this was in order to be able to invoice the customer (cash sale) and due to using items which had been bought long before the company was started, but still had a value attached to it.

Therefore my net profit is actually overstated as there was no cost attached to that part number. And your tax is calculated on your net profit. And this is for a sole trader company.

I forgot to mention I am using Xpress V12.

I hope this clarifies a bit better. Thank you.

[Dave A]

Therefore my net profit is actually overstated as there was no cost attached to that part number. And your tax is calculated on your net profit. And this is for a sole trader company.

It would also mean your current stock valuation is under-reported in the accounts by the same amount - is that correct?