I am a little perplexed about the gross profit report. A lot of items shows 100% profit with buying price setup in the items. I normally create an item then put standard buying price. Purchase receipt is created after. Sales order to Delivery Note to Sales Invoice (sometimes sales invoices first then delivery note). I will convert Purchase Receipt into Purchase Invoice close to the payment date. I have seen a lot of items with 100% profit, which quite frankly is frustrating. What is the workflow to get correct gross profit on a sale? And how do I rectify the existing problem?
Are the prices listed in the purchase receipt? This is where the valuation is created.
You can check if there is a valuation in the stock ledger. If it’s missing, you can do a landed cost voucher on purchase receipts to update the valuation.
Yes. Prices are listed at purchase receipt and reflected at GL as credit (stock received but not billed). My understanding is that once the purchase receipt is entered, the buying price is entered as well. But in my case, it does not happen.
In the stock balance it appears that the “In Value” is zero, which is causing the problem…
Do you have “Make accounting entry for every stock movement” checked in your Accounts Settings?
Can you post Stock Ledger report output for the same item?
Yes, it was checked.
Here is the stock ledger:
I think the issue is because of negative inventory. As you have enabled negative inventory system does not found actual buying rate on delivery, it takes it as zero.
is there a way to fix this? I have two months of invoices that show incorrect profit. Thank you.
May be in case of negative inventory, we can consider average buying amount, instead of actual. Does it make sense?
@nabinhait it’s not just the matter of report. We can show avg buying rate on the report but the system also must post stock value/COGS eventhough the qty is negative…so both sides are equal…