stock double entry

db141414

Hi

Can someone tell me the double entry for a reduction in closing stock once a sale has been made:

Dr Bank
Cr Sales

How do I account for the reduction in stock

I've been told
Cr Stock (P&L)
Dr Purchases (P&L) but i dont understand why this would result in an increase in purchases, although they offset.

what about balance sheet stock?

Thanks

WestonDave

Slightly odd way of going about it and the answer depends on other accounting you are doing.


First part is right in respect of sales assuming you only do "cash" sales not on credit and therefore no debtors are in place.
Second part - you wouldn't normally have stock in the P&L - that is a balance sheet item as an asset. If you buy items for stock then the correct entries are DR Stock (BS) CR Bank (BS) (again assuming you buy for cash). When you sell you then do DR Purchases (P&L) CR Stock (BS). This raises an expense in the P&L under purchases for the cost of items sold and reduces the stock value held on the BS.