How Guru Pet Company found 23 points of gross profit its books were hiding

Amy and JJ Stone founded Guru Pet Company in 2022, after years of developing dog toys for other brands. The company designs chew, fetch, puzzle and plush toys, sells them through its own online store and to wholesale buyers, and is now based in Charleston, South Carolina.

The business was growing. Sales were strong and customers kept coming back. Amy already had accounting support in place, so on paper the books were being kept.

The margin never made sense. Her reports showed a gross profit of 31%, which did not fit the business Amy was running every day. Her inventory never matched, and cost of goods sold looked far too high. Nobody could explain why.

The reports looked complete. The numbers were not. When Twelix reviewed the books, the problems sat in the setup, not in the business:

• Products mapped to the wrong accounts.

  Sales and costs landed in accounts that did not match the products behind them.

• Inventory items set up incorrectly.

  Stock on the books drifted away from the stock actually on hand.

• Incorrect journal entries.

  They distorted both the inventory balance and cost of goods sold.

• Inconsistent product-level accounting.

  Similar products were not recorded the same way each time.

Gross profit is the number a product business prices from. With it understated by 23 points, every decision that rested on it was a guess.

• Pricing.

  Every price was weighed against a margin that read 23 points too low.

• Inventory purchases.

  Reorders rested on inventory records that did not match the shelves.

• Profitability.

  Which products truly earned money was buried in the wrong accounts.

• Forecasting.

  Growth plans started from 31%, not from the 54% the business was earning.

The fix went backwards before it went forwards. The margin problem lived in the history, not in the current month, so the work started with 2024.

1. 1

   Product mappings corrected

   Every product was pointed at the right sales and cost accounts, so each sale carried its own cost.

2. 2

   Inventory accounting fixed

   Inventory items were set up again so the stock on the books matched the stock on hand.

3. 3

   Incorrect journal entries removed

   The entries that had been distorting inventory and cost of goods sold came out.

4. 4

   2024 and 2025 reviewed until everything tied

   Every transaction across both years was reviewed until inventory, cost of goods sold and the profit and loss agreed with each other.

   “Jaimin, Dhruval and the entire team are responsive, they're knowledgeable, and they truly care about our success.”