Changing from Periodic inventory system to SAP

Hi All,
I have an accounting questions regarding company that switching from Periodic Inventory system to SAP's perpetual inventory system.
For company that practices Periodic Inventory System, the method to calculate cost of goods sold = opening stock balances + purchases - closing stock balances. All these is reflected in the P&L statement.
When they switch to SAP, do they need to enter all these figures into SAP for the opening balances?
As SAP will not have opening balance stock, closing stock and purchases accounts, do they have to create these accounts in P&L just to take in the balances?
Does anyone have implemented for company that changing from periodic to perpetual inventory system? How do you take in the opening balances? if possible please give example, thanks in advance.
Regards,
MH

Hi All,
Thanks for the reply. But what is the variance that you guys are talking about? Take example:
Old system:
Opening Stock balance = $ 5,000
+Purchases = $20,000
-Closing Stock balance = $ 9,000
Balance = $16,000
The amount that goes into Asset is Closing Balance $9,000 and the amount goes to P&L as COGS is $ 16,000? The rest for $20,000 and $ 5,000 can be ignore?
Thanks in advance if anyone can answer my question here.
Regards,
MH

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Could SAP B1 handle " Periodic inventory System " ?

if SAP can handle Periodic inventory system, how to do this ?

Hi Jamesss,
Periodic inventory is a system of inventory in which updates are made on a periodic basis. This differs from perpetual inventory systems, where updates are made as seen fit. In Periodic Inventory System no effort is made to keep up-to-date records of either the inventory or the cost of goods sold. Instead, these amounts are determined only periodically-usually at the end of each year.
As the inventory records are not updated as transactions occur, there is no need of Inventory Subsidiary Ledger. The foundation of the periodic inventory system is the taking of a complete physical inventory at year-end. This physical count determines the amount of inventory appearing in the balance sheet. The cost of goods sold for the entire year then is determined by a Short Computation.
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For a return to supplier
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Accounts Payable                         DrXXX
Cash                                                         CrXXX
Purchases Discounts                               CrXXX
When Company is the Seller
Note:Cost of goods sold is deal with in the Cost of Goods Sold section of the income statement at the end of the accounting period. Adjusting Entries are made to adjust ending inventory for items sold.
Sale to customer on credit
Accounts Receivable                    DrXXX
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Customer returns to seller.
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Accounts Receivable                            Cr XXX
Customer pays off bill With in discount period
Cash                                            Dr XXX
Sales Discounts                           Dr   XX
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Customer pays off bill After discount period
Cash                                            DrXXX
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Cost of goods sold is deal with in the Cost of Goods Sold section of the income statement at the end of the

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I am new here so please can you explain Periodic Inventory in SAP Business one. I am using SAP Business One 8.8.
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Hi Sameer,
Just copy below text and paste it in notepad.....
Perpetual vs. Periodic Inventory System Journal Entries
A. The Sale and Purchase of Products
Perpetual inventory systems show all changes in inventory in the "Inventory" account. Purchase accounts are not used in a perpetual inventory system.
Periodic inventory systems keep the inventory balance at the same value that it was at the beginning of the year. At year end, the inventory balance is adjusted to a physical count. To account for inventory purchases in a periodic inventory system, an account called "Purchases" is used rather than debiting "Inventory".
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                   Beginning inventory      100 units @ $6 = $ 600
                   Purchases                900 units @ $6 = $5,400
                   Sales                    600 units @ $12 = $7,200
                   Ending inventory         400 units @ $6 = $2,400
         Perpetual Inventory System       |    Periodic Inventory System
      1. Beginning inventory 100 units at $600
          Inventory account shows         | Inventory account shows
          $600 in inventory.              | $600 in inventory.
      2. Purchase of 900 units at $6 per unit
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             Acc. Payable            5,400|     Acc. Payable           5,400
      3. Sale of 600 units at a selling price of $12 per unit
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             Sales                   7,200|     Sales                  7,200
          Cost of Goods Sold   3,600
No entry
             Inventory               3,600
      4. End-of-period entry for inventory adjustment
          No entry needed.                | Inventory            1,800
          The ending balance of inventory |    Cost of Goods Sold 3,600
          shows $2,400.                   |    Purchases               5,400
      Note: The periodic inventory adjustment in transaction 4 adjusts
            inventory to the physical count, closes out any purchase accounts,
            and runs any difference through cost of goods sold.
B. Cost of Goods Sold in a Periodic Inventory System
Perpetual inventory systems record cost of goods sold and keep inventory at its current balance throughout the year. Therefore, there is no need to do a year-end inventory adjustment unless the perpetual records disagree with the inventory count. In addition, a separate cost of goods sold calculation is unnecessary since cost of goods sold is recorded whenever inventory is sold.
The inventory account in a periodic inventory system keeps its beginning balance until the end of period adjustment to the physical inventory count. Therefore, a separate cost of goods sold calculation is necessary. The following calculation shows the calculation for the preceding example.
                   Beginning Inventory                  600
                   Net Purchases                      5,400
                   Goods Available for Sale           6,000
                   Ending Inventory                   2,400
                   Cost of Goods Sold                 3,600
                                                     =======
C. Purchase Returns and Allowances and Purchase Discounts
"Purchases" has a normal debit balance since it replaces the debit to "Inventory". It has two contra accounts known as "Purchase Discounts" (Purch. Disc.) and "Purchase Returns and Allowances" (Purch. R&A) that reduce it to determine "Net Purchases". The balance of these two contra accounts is a credit because "Purchases" is a debit. Remember that contra accounts always have a normal balance that is opposite to what they are contra to. Purchase-type accounts are temporary accounts (i.e., they are closed at year end) and only appear in a periodic inventory system. They simply serve to replace the corresponding inventory portion of an entry that exists in a perpetual inventory system. The following entries illustrate purchase returns and discounts in perpetual and periodic inventory systems:
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          Acc. Payable      700          |    Acc. Payable      700
             Inventory          700      |      Purch. R&A            700
      2. In a previous transaction, Ace purchased merchandise on account at
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          Acc. Payable    1,000          |    Acc. Payable    1,000
             Inventory              20   |       Purch. Disc.          20
             Cash                  980   |       Cash                 980
D. Sales Returns and Allowances and Sales Discounts
Sales has two contra accounts known as "Sales Discounts" (Sales Disc.) and "Sales Returns and Allowances" (Sales R&A) that reduce it. The normal balance for these two contra accounts is a debit. Sales and its contra accounts may appear with either a perpetual or periodic inventory system. The following entries illustrate the accounts in perpetual and periodic inventory systems. The entries assume the gross method.
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      1. Sam Company received $600 of damaged merchandise from their customer
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          merchandise that Ace retained. The original cost of the merchandise
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             Acc. Receivable         700 |       Acc. Receivable       700
          Inventory             400
No entry
             Cost of Goods Sold      400
      2. Sam received a customer payment for a prior sale on account of $1,000
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          Cash                  980      |    Cash                980
          Sales Disc.            20      |    Sales Disc.          20
             Acc. Receivable        1,000|       Acc. Receivable      1,000
Sales on the income statement should be shown net of its contra accounts. For example, if a company has $980,000 in sales, $3,400 in sales returns and allowances, and $2,200 in sales discounts; net sales would be $974,400.
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