Sole Trader - Closing / Opening Stock

[staffsuk]

Hey again everyone :-)

Thanks for all the advice received thus far - it's been really helpful.

Just about finished my book keeping for 09 / 10. I'm a sole trader - non VAT registered.

Just wanted to check what I am doing regards my stock is correct...
I only have a couple of items which I purchased 09/10 and sold 10/11. Am I correct in assuming the figure I allocate is either the lower of the purchase cost or realisable value at the year end? As it happens I know what the value is as I sold them in May - a measly £43.50!

OK - so in Accounts Portal I enter the following transactions in the journal:

05/04/10:
Journal Entry - Closing Stock
Dr. Stock (Current Assets) £43.50
Cr. COS (Expense) £43.50

06/04/10:
Journal Entry - Opening Stock
Dr. COS £43.50
Cr. Stock £43.50

The net result is it increases my Profit by £43.50 for 09/10 and I have a starting Loss of £43.50 in 10/11 (until I enter the sales income which would cancel it out).

Is that correct?

Thanks again!

[Scalloway]

You are correct. Your profit will increase in 09/10 as you are reducing the cost of goods sold by the value of the stock. Profit in 10/11 will be reduced as the cost of goods sold will be increased by the cost of the stock.

[staffsuk]

Thanks - I'm learning little by little....
:D:D:D:D