I am running a jewellary business ...I am facing a trouble regarding loss of stock..like all other manufacturing business there is also a normal loss while making the ornaments .bit unlike other business this normal loss is used as payment to the job workersso its a part of my cost of goods sold ..so my question how to account for the same .
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Accounting treatment
Replies (4)
PASS AN ENTRY AS FOLLOWS
NORMAL WEAR & TEAR A/C DR.
TO CLOSING STOCK/ PURCHASE
hi Priyanka,
you can account it in manufacturing voucher, and Account like consumption --> production
Then it will deduct consumption part from Stock, and add production to the stock.
hence the amount of loss of weight in the production deducted from stock it will automatically reflect in your trading account as cost of production. no need to do any additional entry
Hii
Danish ..thanks for ur reply ..I did exactly wht u said as I worked in acct dept earlier for a long time ..but for my own business i faced trouble at income tax assessment ..the assessment officer is saying as I am nt charging anything seperately in my trading account ..I am concealing the cost ..i failed to make him understand the implication of normal loss considered in cost of production ..thts why I wanted to be doubly sure abt it ..thanks again..
You have to pass JV as Tax pandit said..
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