You will have to include all of the raw materials that are already used in the finished goods when entering the raw materials into Sage 50. Then when you build your finished goods the raw materials will be reduced accordingly and the remaining inventory should match the physical count. Yes, it is a large task to breakdown the already finished goods back to their raw state but well worth the exercise for accuracy.

You will have to include all of the raw materials that are already used in the finished goods when entering the raw materials into Sage 50. Then when you build your finished goods the raw materials will be reduced accordingly and the remaining inventory should match the physical count. Yes, it is a large task to breakdown the already finished goods back to their raw state but well worth the exercise for accuracy.

You can start out with setting up the Bill Of Materials and the conversion cost in each finished goods part number item.  

Whatever cost is recorded for raw materials, will be added to Finished Goods when you process items for a Bill Of Materials.   There won't usually be a journal entry.

When setting up inventory, you have the opportunity to set up opening balances, if you have them.  (BTW, Allowing negative inventory quantities almost guarantees a big mess and a failure, so shut that off at the start).  If the inventory is already out of 'historical entry', you'll have to use Inventory Adjustments to set up the value of inventory on hand.  

If you enter BOM transactions for items built in the previous year, you'll credit assembly cost in the wrong year, and have to adjust it back.

If you don't have any startup data, it's possible to just get the quantities set up as well as possible, and correct the dollar amounts later, or allow the dollar amounts to be corrected as you process transactions.  

The proportion of output that will be garbage depends on the input, so the best way to proceed will be a judgement call based on what resources you have at your disposal.  Tackle one area (A/R, Payroll, A/P, Inventory) at a time, get it working, and clean up as you get better data.  

Sage 50 only posts COGS when you record a sales invoice, so the sooner you have correct finished goods costs, the sooner your reports will give you useful feedback.  

Outside of a textbook, I've not seen a situation where there is a set of perfect records to import, and everything peach-ey.  Maybe some business owners buy a new accounting system when the old one is working perfectly, but I've never seen it.   The old Simply Accounting manual began with the phrase "Start with a balanced set of books".  That's the ideal, but not the norm.