Provision for slow moving item

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Querist : Anonymous

Querist : Anonymous (Querist)

27 July 2012 Sir
I want to know about the how to Calculate and record monthly provision for slow moving stock.

At least on a Simple Sentence. Thanks in Advance

CA Lokesh Pokharna

CA Lokesh Pokharna (Expert)
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31 July 2012 for provision you have to consider reduction in value occurring due to slow moving & make provision of the same..

Querist : Anonymous

Querist : Anonymous (Querist)

31 July 2012 Thank you sir
It means debit the provision for slow moving inventory (current asset) credit the inventory (current assets). Then when it will write off. debit write off slow moving inventory credit provision for slow moving inventory. Is it right OR Wrong ? Please reply.

CA Lokesh Pokharna

CA Lokesh Pokharna (Expert)
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01 August 2012 you should first debit P &l and credit Provision for value reduction in slow moving item (on estimated basis)

when you find actual loss due to slow moving in value then do necessarily entries.

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Querist : Anonymous

Querist : Anonymous (Querist)

01 August 2012 Sir,
Can you give me an example on this Journal Entry.
We have estimate the value of Slow moving goods is Rs.15,000. So what will be the entry for this issue.
Thanks in Advance

CA Lokesh Pokharna

CA Lokesh Pokharna (Expert)
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06 August 2012 slow moving item a/c dr 15000
To slow moving provision a/c 15000

profit & loss a/c dr. 15000
To slow moving item a/c 15000

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Querist : Anonymous

Querist : Anonymous (Querist)

06 August 2012 Thank you Sir
Did you mean
Slow moving item (Indirect Exp in Tally) Dr
to Slow moving Provision ( Liability In Tally)
I dont understand the Second entry

If you can help me this issue please reply.

Thank you fo your All Reply

CA Lokesh Pokharna

CA Lokesh Pokharna (Expert)
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06 August 2012 second entry is just for finalization purpose while slow moving provision is a provision not a liability (like dep. provision, bad debts provision, tax provision)

Querist : Anonymous

Querist : Anonymous (Querist)

06 August 2012 Thank you very much Sir. For your time spent for my query.

That means both slow moving item and slow moving provision are indirect expense in Tally. While we identify the original slow moving item through physical count. Rs 18500 instead of Rs 15000. So what will be the entry.