When ever you debit the inventory account you are increasing the value in the account.

Sage 50 will handle inventory adjustments on a quarterly basis. If you are doing a full count each quarter you can either enter the values in the inventory module or you can make a general journal entry to adjust the accounts. Depending on the results desired you may want to increase (debit) or decrease (credit) the Inventory asset account.

I can't figure out the correct journal entry. This is what I have:

The more normal method of handling this situation would be for all purchases to go to an Expense account for purchases (5200) for the entire period. The Asset account for Inventory (1400) is adjusted after each period count has been completed. Only these two accounts are required in this scenario as you would adjust account 1400 to the amount of the actual account and correspondingly balance the entry with account 5200. The opening Inventory is always recorded in 1400 and at the end of the period the ending inventory would also be reflected in account 1400.

Current Balance in account 1400 is $6,348.52

Actual inventory count is $6,952.65

The entry to adjust would be:

1400  credit $6,348.52 (to remove current balance)

1400  debit $6,952.65 (to record actual count)

5200  credit $604.13 (to balance entry and acknowledge the inventory purchased but not yet used.)

I hope this helps

If I understand you correctly the accounts for "beginning inventory" and "ending inventory" and therefore the accounts for"cost of Goods Sold" are not required at all.

All I would need is the asset account (1400) and purchases (5000).

Dave

I am assuming this to be a fully manual method of recording inventory. The module would be set up differently and can handle the Cost of Goods Sold. 

In a manual system I would use the Cost of Goods Sold account (5250?) instead of Purchases (5200) for all inventory purchases and adjustments.

Yes, the system is manual. You just solved the problem for me ( I inherited this chart of accounts from a previous user and was trying to work with it).  Now if I can just get Sage to let me delete the unnecessary accounts.  Many thanks.

Dave

Dave: The problem with deleting accounts is that they have had entries made in the accounts. what can be done is to be sure the balance in the account is zero and then make the account inactive. At least this way you will not see the accounts on a listing nor will you make an entry to the account without being asked if you wish to activate the account again.

The accounts are required to stay in place for the history if and when you have to go back in time. We do not recommend it but you can delete all history up to a certain date and then accounts could be deleted. Again this is not recommended because you would loose a lot of history that may be necessary in case of an audit.

Good advise, thanks again.

Dave