I manage the accounts for two companies A & B. One company has a warehouse and all goods come into stock through Company A. Company B does not have its own warehouse or stock. Goods sold by Company B are purchased from Company A at no profit and a share of the overheads of Company A are invoiced to Company B. This allows for company B to prepare its own separate accounts but the disadvantage is that Company B has no stock and it makes it difficult to account for stock on a daily basis due to the daily invoicing from Company A. Does anyone know of a better way of handling this?
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Eh!
Why does Company B have any stock at all, if it is purchasing from Co A stock that it is selling/sold to customers. Perhaps I have misunderstood.
Ah
Still don't see why there is a stock problem?
Co B purchases from A at £100 plus £25 Overhead allocation and sell to Customer X for £150.
Jnl entries in B are
Cr Sales £150 - being Invoice value to Customer X
Dr Cost of Sales £100 - being stock purchased from Co A
Dr Overheads £25 - being administation costs incurred by Co A
No need for stock in Co B.
Co A will have to account for stock but that doesn't seem to be the crux of your query.
D
problem is elsewhere
It seems to me that the problem isn't Co B but Co A and stock it holds for Co B, am i right?
If so, and the issue is what stock is physically still on the shelves of Co A warehouse but allocated to a Co B sale but not sold yet to B, nor despatched on behalf of Co B then it's not foremost an accounting issue but a stock management one.
Surely stock allocated to future orders is an issue for your Co A whether or not the customer is a 3rd party or inter co. If you have solved this problem for 3rd party customers then Co B shouldn't be any different. Then when despatched simply Cr Stock Dr COS, Cr Sales Dr InterCo Debtor in Co A. Co B posts Dr Purchases Cr Inter Co Creditor, Cr Sales Dr 3rd party Debtor.
Still don't need to account for stock in Co B and until it's despatched and sold by Co A it's all their stock.
If I'm wrong then of course I'm wrong.