teaching
2046 Points
Posted on 02 January 2018
stock reserve is a unrealised profit.
when closing stock which is held by consignee at invoice price. that includes unrealised profits. so consignor has to pass adjustment entry for unrealised profit.
profit and loss a/c. Dr.
to stock reserve a/c
this stock reserve amount to be shown under balance sheet as deductable amount from closing stock. (stock with consignee - stock reserve)