Materials Ledger Card
A materials ledger card, also referred to as a stock or inventory card, is a record-keeping tool used in an inventory management system. It tracks all transactions related to a specific item in inventory, including purchases, sales, returns, and adjustments. This type of record keeping is part of the perpetual inventory system that maintains a continual, up-to-date record of inventory.
Each individual item of inventory will have its own materials ledger card, which records the following:
- Date: The date of the transaction.
- Description: Information about the transaction, such as whether it was a purchase or a sale.
- Quantity: The number of units bought or sold.
- Unit Cost: The cost per unit for the item.
- Total Cost: The total cost of the transaction (i.e., Quantity x Unit Cost).
- Balance/Stock on hand: The number of units remaining in inventory after each transaction.
For example, a hardware store might have a materials ledger card for each type of nail it sells. When a new shipment of nails is received, the quantity received and the cost are recorded on the ledger card. Then, each time a box of nails is sold, the quantity sold and the sale price are also recorded.
This allows the store to always know how many boxes of nails it has in inventory at any given time, and also provides a running record of purchases and sales for accounting and reordering purposes.
Materials ledger cards can be physical cards in a file, or more commonly in today’s business environment, digital records in an inventory management system.
Example of a Materials Ledger Card
Let’s imagine a business that sells bicycles and uses a materials ledger card to keep track of its inventory. Here is how the card might look after a few transactions:
| Date | Description | Quantity | Unit Cost | Total Cost | Balance |
|---|---|---|---|---|---|
| 2023-07-01 | Beginning Balance | 50 | $200 | $10,000 | $10,000 |
| 2023-07-02 | Purchase | 20 | $200 | $4,000 | $14,000 |
| 2023-07-03 | Sale | -15 | $200 | -$3,000 | $11,000 |
| 2023-07-04 | Sale | -10 | $200 | -$2,000 | $9,000 |
| 2023-07-05 | Purchase | 30 | $200 | $6,000 | $15,000 |
| 2023-07-06 | Sale | -20 | $200 | -$4,000 | $11,000 |
*Note that sales are recorded with a negative quantity to indicate the reduction in inventory.
On July 1, the company starts with 50 bicycles at $200 each, for a total value of $10,000.
On July 2, the company purchases an additional 20 bicycles at $200 each, increasing the total value of inventory to $14,000.
On July 3, the company sells 15 bicycles. This is recorded as a reduction in the quantity and total value of inventory, which now stands at $11,000.
On July 4, the company sells another 10 bicycles, reducing the total value of inventory to $9,000.
On July 5, the company purchases another 30 bicycles, increasing the total value of inventory to $15,000.
Finally, on July 6, the company sells 20 bicycles, reducing the total value of inventory to $11,000.
Throughout this period, the materials ledger card provides a running record of all transactions involving bicycles, enabling the company to see how many bicycles it has in stock at any time, and how much it has spent and received on these transactions.
