05 Jan 2011, you purchased 5 pcs of stock item P101 @ $233.64 ea (total $1,168.20)
10 Jan 2011, you purchased another 10 pcs of stock item P101 @ $214.95 ea (total $2,149.50)
15 Jan 2011, you sold a pcs of stock item P101 @ $350.00 ea
When you did an Account Enquiries for your Cost of Goods Sold account, you were surprised finding the cost of goods sold for item P101 was $221.18.
What’s going on?
Why the cost of goods sold for item P101 was neither $233.64 nor $214.95 that you had purchased?
MoneyWorks stock valuation is base on Average Costing. So, when you purchased 10 pcs of stock item P101 on 10 Jan 2011, the average cost of P101 had changed.
$233.64 * 5 pcs = $1,168.20
$214.95 * 10 pcs = $2,149.50
Average cost: ($1,168.20 + $2,149.50)/15 pcs = $221.18
When invoice was created, the double entry for the transaction was:
Debiting Cost of Goods Sold: $221.18
Debiting Accounts Receivable: $374.50
Crediting GST Received: $24.50
Crediting Stock On Hand: $221.18
Crediting Sales: $350.00
To view the double entry transactions, simply run an Account Enquiry from the Enquiries menu.