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Lesson 7 Notes Linking Ledger Accounts

The document discusses setting up inventory items in MYOB accounting software. It includes steps for entering stock items, linking inventory items to accounts, and entering buying and selling information for each item. Sample screenshots of the inventory item setup are also provided.

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Barry Holmes
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18 views

Lesson 7 Notes Linking Ledger Accounts

The document discusses setting up inventory items in MYOB accounting software. It includes steps for entering stock items, linking inventory items to accounts, and entering buying and selling information for each item. Sample screenshots of the inventory item setup are also provided.

Uploaded by

Barry Holmes
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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GOROKA TECHNICAL COLLEGE

Computerised Accounting Systems

Topic THREE: ACCOUNTS PAYABLE

Lesson Seven

Learning Outcomes:

At the end of this topic the student will:

1. Enter stock items in inventory.


2. Link inventory items to expense, income and asset accounts.
3. Enter buying and selling information.

_________________________________________________________________________________
Setting up Inventory
Setting up inventory will involve accounts payable record keeping processes associated with
ordering, receiving and paying for goods bought for resale. You will use the MYOB to:
Inventory commend center to setup inventory framework for a trading business. Within it
you enter stock items, create account links, and record buying and selling information,
opening stock values and balances.
Card File commend center to setup vendor cards for regular suppliers. You will establish
linkages to general ledger accounts for inventory, purchases, creditors, income and cost of
goods sold, a linkage to cash account is already established. You will then record creditor
details and opening balances.

Purchases commend center to purchase goods and services, print purchase orders, process
purchase returns and make payments to suppliers. It is critical that payments to trade creditors

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(vendors) are made through the purchases commend center otherwise their payments won’t be
recorded against their accounts.

Banking commend center to make other payments, to generate recurring payments and to
process petty cash payments.

If you store physical stock items you will want to track the ins and outs of those items. In this
unit you will create an inventory list and enter opening stock. You will also assign unit costs
to calculate the value of stock on hand. Finally, you will view the opening balance sheet for
Henry’s Paints to check the opening entries and other balances.

Enter stock items


Henry has so many different paint types and colors that to record each one would be too time
consuming. He is happy to record them under the categories of indoor, outdoor, ceiling and
furniture. The price for each category remains within a relatively small price range so he will
accept the average cost calculated by MYOB. Follow the steps below to entre Henry’s stock
items.

Follow these steps

1. Start MYOB program from desktop shortcut and open Henry’s Paint Wholesalers data
file.
2. From the commend center, select the inventory commend icon.
3. Click, the items list button. The item list dialog box will appear.
4. Click the new icon. The blank item information dialog box will appear. A code is
applied to each paint category (referred to as an item number). This could contain
numbers and /or letters in combination. To save time when entering transactions,
Henry has chosen codes that will be easy to remember:

Item number Item name


Indoor - indoor paint
Outdoor - outdoor paint
Furniture - furniture paint
Ceiling - ceiling paint

5. Key Indoor in the input area next to item# and press Tab.
6. Key Indoor paint for the name. Your item information should look like figure 4.13

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Stay on this screen for the next section.

Fig: 4.13 Item information window for indoor paint.

Link inventory items to expense, income and asset accounts.

You are now going to create linkages to the general ledger accounts. The screen should look
like figure 4.14 below.

Follow these steps:


1. Insert a check mark x by clicking in the three checkboxes next to I Buy This
Item, I Sell This Item and I Inventory This Item. The screen displayed will now
assign the correct general ledger accounts to record future buying and selling
transactions. MYOB can also search for the correct ledger accounts for you.
2. Click the search icon next to Asset Account for Item Inventory. An accounts list
will appear.
3. Highlight the 1-1330 Indoor Paint account and click Use Account (or double
click to select the account automatically). The item information window will return.

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Fig: 4.14 Item information window for indoor paint with linked accounts.

4. Click the search icon next to Income Account for tracking sales.
5. Key 4 to fine the income accounts quickly.
6. Highlight the indoor Paint income account (4-1003) and click Use Account. The
item information window will appear again.
7. Click the search icon next to Cost of Sales Account.
8. Key 5 to locate the cost of sales accounts quickly.
9. Highlight the Indoor Paint cost of sales account and click Use Accounts.
By linking accounts, you allow for each business activity to record simultaneously to the
relevant ledger accounts in the trial balance.

Enter buying and selling information.


As a wholesaler, Henry will be exempted from paying sales tax, but when he sells to a retailer
or a final customer he is responsible for the collection of sales tax (GST). Paint attracts a sales
tax rate of 22 percent.

Follow these steps:


1. Click the input box next to Buying Unit of Measure.
2. Key 1. This means you purchase individual units, not crates of 10.
3. Click Tax Code When Bought and select code E (0%).
4. Click Selling Price and key 46.
5. Click Selling Unit of Measure and key 1.
6. Click Tax Code When Sold and drag the selection to code S (22%).
7. Click OK when finished.

Your screen should look like figure 4.15 for buying details and figure 4.16 for selling
details.

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Fig: 4.15 Item information window for indoor paint with buying details.

These stock item details enables the recording of the item when it is bought for inventory
valuation purposes in the stock cards within the MYOB system.

Fig: 4.16 Item information window for indoor paint with selling details.
When stock item is sold, it is recorded using this information. It affects all linked ledger
accounts.

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Activity 4.5
 Add:
Outdoor - Outdoor Paint,
Furniture - Furniture Paint,
Ceiling - Ceiling Paint,
to the inventory list.
 Select the appropriate income and cost of sales accounts.
 Leave the buying and selling information the same as for indoor Paint.
 The selling price for outdoor paint is K55, furniture paint K42 and ceiling paint K35.
 Check your items list against the one in figure 4.17

Fig: 4.17 Inventory list

__________________________________________________________________________________
Reference:
Keeping Account with MYOB by Cathy Grundy & Doug Lyte.

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