Friday, February 8, 2013

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.