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Post Info TOPIC: How to write-off damage stock


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How to write-off damage stock


Hello all

Please can any help ? Using Vt transaction +

I need to write off 200.00 pounds of damage stock. Am I correct in reducing inventory / Stock by 200.00 pounds as well as reducing the Owners equity account by 200.00 pounds. What else must be done to complete the transaction I need some kind person to shine a light into the tunnel

Many Thanks Gordon Thom



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Gordon Thom


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Dont know how VT records it but if you are just writing down some stock isnt it just a case of reducing the closing stock in the profit and loss and balance sheet.

Regards

MarkS



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Mark Stewart CA

http://stewartaccounting.co.uk/

Providing accounting, bookkeeping, payroll and tax services to small and medium sized businesses across Central Scotland and beyond.



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Hello Mark
Thanks for your reply.

I do not think that is the case as the value of stock/inventory is added to the assets and also to the owners equity which I believe is correct. Surely there is a part I am missing to complete the transaction. By reducing both of these account is only part of the transaction, and to me seems incomplete. Hopefully someone else will try and give an answer.

Thanks Again

Gordon Thom



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Gordon Thom


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Marks correct Gordon.

The double entry is

Db profit and loss being an increase in the expense of stock written off
Cr the balance sheet being a reduction in the asset of closing stock

At the year end the balance on the p&l account is transferred to owners equity but after the write off has taken place.

In Vt it may might sense to set up a nominal code in the Cost of Sales range for "stock write off's"

The double entry could then be

dr Stock write off's

Either
cr Closing stock in the balance sheet if the stock was bought in a prior year
or
cr purchases if the stock was bought in the year.

Either way you'll end up with the same posting as Mark

hth



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Tony

Responses are intended asoutline only. Formal advice should be sort from your Institutes Technical Department or a suitably qualified Accountant.
.


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Hello Mark and Tony.
Ten thousand apologies Mark you were right and I was wrong. Your explanation just seemed too simple for me to grasp. However Tony painted a larger picture and this helped the penny to drop. Thank you both for your kind effort to help me

You guys are the best

Regards

Gordon Thom

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Gordon Thom
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