As per books value of stock is Rs.2 Lakh but physically we have no stock, in our production process material is burn and its invisuable loss since FY-2006 to FY-18-19 we have not passed burning loss entries in our books now we want to passed JV in fy-19-20 so please tell me how to pass journal entries. In accounting software ( Tally ) we maintain only account not inventory.
23 December 2019
If you are maintain books in tally then you will enter value of closing stock manually. [Gateway of Tally > Balance Sheet > Current Assets > Closing Stock]. Since your loss is normal in processing there is no need to pass any entry because normal loss is to be absorbed by the output or cost of sales uniformly and this is to be automatically done because in every year you entered closing stock as of physical. However, If you booked stock without reconcile physical then your closing stock is overvalued that means your previous year's profit is exceeded by the loss amount of that year. In this case you may pass reconciliation entry by debiting the profit and loss account and if profit and loss account is added to capital account then debiting capital account and crediting ledger Adjustment or ReValuation of Stock account. This ledger is to be created in the purchase group. By this way your purchase will be reduced by the amount of that entry and so on the opening stock + this adjusted purchase - closing stock as physical = consumption of stock will be reconciled as per process.
22 May 2020
You can also debit the loss to trading account instead of reducing the purchases. Both have same impact but it will be much transparent and clear to understand. However have you received any amount from Insurance Claim for the loss of stock ? If yes credit such amount in PL.
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