How do I account for a unit written off?

Summary

This article will explain how to account for writing off a unit from Unit Sales and altering the values in the accounts.

More Information

As the summary states, there are two things to do in order to write off a unit from the system.

Writing Off the Value of the Unit

In order to reduce the value of stock, you will need to know the Nominal Centres for your 'Stock Value' and 'Unit Write-Off'.

If you do not have a 'Unit Write-Off' centre, you will need to create one making sure that you set the "P/L indicator" to 'Cost of Sales'. See : here for instructions to do this.

You will need to do a journal between these centres.

Go to " Nominal Ledger Journal Entries Double Entry".
On "1st Centre:", enter the centre for "Unit Write-Off".
On "Date:", enter the date that you wrote off the unit.
On "Amount:", enter the value of the unit as it appears on the Unit Sales system as a positive amount, because you will be debiting the "Unit Write-Off" code and crediting the "Stock Value".
On "Cheque No./Comment:", type '<Unit Stock number>' and 'W/Off'.
On "2nd Centre:" enter the centre for your "Stock Value".
The "Amount:" will automatically be entered in as a negative of the amount entered previously.
Accept the posting.

This posting should have the effect of reducing the value of your stock on the accounts by the cost of the unit concerned, and increasing the cost of sales in the month in question by the same amount hence reducing your profit in that period.

Accounting for Insurance Money received

In order to account for any insurance money received for the unit written off, you will need to know the Nominal Centres for your 'Unit Write-Off' and 'Bank Account'.

As before you will need to do a journal between these centres.

Go to " Nominal Ledger Journal Entries Double Entry".
On "1st Centre:", enter the centre for "Bank Account".
On "Date:", enter the date that you received the payment from the insurance company.
On "Amount:", enter the value of the insurance payout as a positive amount, because you will be debiting the "Bank Account" code and crediting the "Unit Write-Off".
On "Cheque No./Comment:" enter the '<Unit Stock number>' and 'In/Pay'.
On "2nd Centre:" enter the centre for your "Unit Write-Off".
The "Amount:" will automatically be entered in as a negative of the amount entered previously.
Accept the posting.

This posting should have the effect of reducing the value of Unit Write-Off on the accounts by the insurance pay out of the unit concerned, and decreasing the cost of sales in the month in question by the same amount hence restoring your profit in that period.

Showing the unit as being Written Off

You will need to show that the unit has been written off in the {VS}} and account for the value of the unit when doing a stock valuation. You will need to:

Go to " Unit Sales Add or Edit Units".
On the "Search on:" enter the unit in question and press <Enter> to list the unit.
Press <F5> or click [Edit] to edit the unit.
Set the "Location:" to 'WRO'.

If this location does not exist, press <Shift+F10> on the 'Location' and enter in an appropriate "Description:", press <Esc> and click [Accept] to create the Location.

Set the "Status:" to 'WRO'.

If this status does not exist, press <Shift+F10> on the 'Status' and enter in a "Description:", set the "Text:" and "Background:" to colours that stand out, press <Esc> and click [Accept] to create the status.

Click on the [Details] tab and in the "Notes" section enter in that the unit has been written off, when, how and if possible by whom.
Click on the [Sale].
- On the "Sale date:" enter the date when the unit was written off.
- Set the "Target price:" to '£0.00'.
- Set the "Actual price:" to '£0.00'.

See here on how to exclude this unit from your stock valuation.

How do I account for a unit written off?

Contents

Summary

More Information

Writing Off the Value of the Unit

Accounting for Insurance Money received

Showing the unit as being Written Off

See also

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