Inventory Accounting Entries

All the Inventory transactions will look for the valuation class and the

corresponding G.L. Accounts and post
the values in the G.L accounts.

For Example: during Goods Receipt

Stock Account - Dr

G/R I/R Account - Cr

Freight Clearing account - Cr

Other expenses payable – Cr

During Invoice Verification

G/R I/R Account - Dr

Vendor – Cr

When the Goods are issued to the Production Order the following

transactions takes place:

Consumption of Raw Materials - Dr

Stock A/c - Cr

When the Goods are received from the Production Order the following

transactions takes place:

Inventory A/c - Dr
Cost of Goods Produced - Cr
Price difference - Dr/Cr

(depending on the difference between standard cost and actual cost)

When the Goods are dispatched to customer through delivery the following

transactions takes place:

Cost of Goods Sold - Dr

Inventory A/c - Cr

When the Goods are issued to a Cost Center or charged off against

expenses the following transactions takes place:

Repairs and Maintenance - Dr

Inventory A/c - C

When the Goods are stock transferred from one plant to another, the

following transactions takes place:

Stock A/c - Dr (Receiving location)
Stock A/c -Cr (Sending location)
Price difference - Dr/Cr

(due to any difference between the standard costs between the two

locations)

When the stocks are revalued, the following transactions takes place:

Stock A/c - Dr/Cr

Inventory Revaluation A/c - Cr / Dr

When the Work in Progress is calculated the following transaction takes

place:

Work in Progress A/c - Dr

Change WIP A/c - Cr

Physical verification /shortages and excesses:Shortages/excesses on
authorizations shall be adjusted using the physical inventory count
transaction.