Problem in making Balance Sheet

hi all,

while making balancesheet i have few problem

i have taken the following g/l account

Total, Direct Cost Applied

Total, Purchases

Total, COGS-Cost of Goods Sold

Inventory, Adjustment Account

beside this iam taking the opening balance and the closing balance

but my problem is this that the

Total, COGS-Cost of Goods Sold is higher than puchase .

can any give me any idea or is something is missing in this,which i forget to take in while calculating my balance sheet.

Regrads,

Shailesh

,

Hi Shailesh,

Before you prepeare your Balancesheet make sure direct postings are not switched on for these accounts. If they are enabled chances are that your accounts will not balance. If you run a trial balance depening on your posting setups your Purchase and Direct Cost Applied accounts should balance.

Before you concentrate on COGS account make sure you have run the Adjust item cost entries batch job as this batch job will update the COGS account. The propose of this batch job is to forward/match the costs of the inbound entries with outbound entries.

Nornally accountants calaculate COGS = Opening Inventory+ Net Purchases - Closing Inventory but in NAV COGS is represented in a single account COGS and this is always correct provided that you are not direct posting to this account and have run the batch job,.

Hope this helps.

COGS will be always higher than Purchase because it is your selling price and that makes your revenue.

Hi Amol,

I’m sorry I can’t agree with your statement “COGS will be always higher than Purchase because it is your selling price and that makes your revenue.”

COGS does not in any way represent selling price or revenue…it’s simply the cost of the items sold.

Consider this example;

Purchase stock worth 100.00 assume that you’ve posted the invoice and it’s in stock

Purchase 100.00 Inventory 100.00

say that you sold all this stock for 200.00

now your COGS is 100.00 and your revenue/income 200.00

once this sale is complete your books should be as follows

Purchase 100.00

Inventtory 0.00

COGS 100.00

Income/Revene 100.00

correction Income/Revenue should be 200.00

Hi Shailesh,

Does COGS account has manual posting allowed? COGS cannot be greater than purchase as for example you cannot consume simething more that what you have bought. I think the error is coming because of some manual entry.

Pranav…

Ohh I am sorry I thought something different .You are right

Check if anybody passed any manual JV in COGS account .