Hi all,
My company is a manufacturing company selling machines and parts, and the accounting system is very old, they just switched from the old Business Vision to Sage 50 Pro Accounting recently.
In the old Business Vision, when I enter an invoice (Debit A/R; Credit HST & Sales), it will automatically do the entry:
Dr: 41280 Cost of Goods Sold
Cr: 11130 Inventory- Raw Materials
By debiting or crediting the amount of the Average Costs of the parts we sold.
The question is now in the new accounting system, I didn't set this automatically entry because the company has too many parts the new system does not have enough space for the whole parts information. Therefore I still use the Old system to generate invoices( and all the parts information are in the old system). And then I will print out the invoices generated from the Old system and enter them in Sage 50.
So I have to Increase the Cost of Goods Sold and Decrease the Inventory by hand.
But my question is: I don't really understand this COST OF GOODS SOLD account, is this Right to DEBIT this account when you selling parts?
Because the way the previous accountant set up the Chart of Accounts is like follows, and it confused me. How can this COST OF GOODS SOLD be BOTH the Heading and Regular Account Type???
40000 EXPENSES Heading
40001 Beginning Inventory Regular
40020 Sales of Inventory Regular
41000 Cost of Goods Sold Heading
41001 Beginning Inventory Regular
41005 Closing Inventory Regular
41006 Inventory Adjustment Regular
41010 Purchases- Materials Regular
......
41080 Delivery Expenses Regular
41090 Total Purchases Total
41100 Raw Material Expense Regular
....... XX XX Expense Regular
41280 Cost of Goods Sold Regular
41990 Total - Cost of Goods Sold Total
Another question is If I SHOULD DO THIS ENTRY, can I enter it in the sales window?
So it is Like:
41280 Cost of Goods Sold -41.12
11300 Inventory - Raw materials 41.12
Thus it will Debit the cost of goods sold while Crediting the Inventory?
Thanks for any help! ^ ^
