When a business buys merchandise, it is recorded on their books as inventory. Once the merchandise is sold, the inventory balance is reduced and the amount paid for the item is recorded as cost of goods sold. The selling price of the item, minus the price paid by the business, is what determines profit. One thing that can really impact a small business owner’s profit margin is inventory shortage because this must be added to the yearly cost of goods sold. Inventory shortages are usually due to damage, theft, or obsolescence, and the best way to control them is by keeping a perpetual inventory. A perpetual inventory allows the business to track cost of goods sold throughout the year. Using the Inventory Control Template is an easy way to create a perpetual inventory.
How to Use the Inventory Control Template
- First, download the Inventory Control Template, which will open into an Excel document.
- Second, create a separate sheet for each item. Type the item name and number, as well as the sheet number, into the three fields at the top of the page.
- Third, fill out the remaining fields as they occur. In other words, fill out the “ordered” fields when you order the product. You will notice that the column titled “balance” will automatically calculate. This tells you how many of the item should still be in the store.
Tips for Using the Inventory Control Template
- Start by opening a new sheet for each item as soon as you make an order.
- Update the sheet when the item is received, and when the item is sold. This will ensure your inventory is always current.
- Conduct regular counts of inventory and compare your count to the inventory record. This will allow you to quickly identify any shortages. Additionally, conducting regular inventories throughout the year will keep you from having to close at the end of the year to conduct an annual inventory.
Small businesses usually operate within a narrow profit margin. Inventory shortage could be the difference between a good year and a bad year. The Inventory Control Template, which is available at no charge on this page, can help you keep track of your inventory throughout the year.
Download: Inventory Control Template
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