Opening & closing stock

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This query is : Resolved

jitu (Querist)

14 June 2015 dear expert

please clear my confusion:
opening stock not showing in trading a/c
i recorded it into opening balance sheet
as current assets

thanks

CA. Sunil Gokhale

CA. Sunil Gokhale (Expert)

15 June 2015 It will appear in opening balance sheet as it is closing stock of last year. The opening balance sheet is nothing else but closing balance sheet of last year. It will also appear in current year's Trading a/c as it is opening stock of current year. So what is the confusion?

jitu

jitu (Querist)

15 June 2015 DEAR GOKHLE SIR,

WILL I HAVE TO PASS A JOURNAL ENTRY FOR CLOSING STOCK LIKE :-

TRADING A/C DR
TO CLOSING STOCK

AND IF I PASS SUCH ENTRY, TRADING A/C WILL APPEAR INTO P/L IN PLACE OF OPENING STOCK

THIS THINGS CONFUSE ME.

CA. Sunil Gokhale

CA. Sunil Gokhale (Expert)

16 June 2015 The opening stock is brought into the books of the current year with the opening entry (which are the figures of the closing balance sheet of last year):
Various assets a/c Dr. (individually)
Opening stock a/c Dr.
To Liabilities a/c (credited individually)
After the above entry is posted to the various assets & liabilities accounts at the beginning of the year, the opening stock account will show a debit balance. Entry for transferring opening stock at the end of the year will be:
Trading a/c Dr.
To Opening stock a/c
After passing this entry the opening stock a/c will be closed.
After physical stock taking & its valuation the entry for recording closing stock at the end of the year is:
Closing stock a/c Dr.
To Trading a/c
The Closing stock a/c created at the end of the year will thus show a debit balance which is an asset and hence shown in the closing balance sheet.

Message likes : 1 times

jitu

jitu (Querist)

16 June 2015 thanks a lot sir for giving your precious time it was very helpful answer.

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