Accounting treatment of expired goods

491 views 1 replies
what is the accounting treatment of expired goods
Replies (1)

Accounting Treatment of Expired Goods:

  1. Identify expired goods:
    Goods that cannot be sold due to expiry must be removed from inventory.

  2. Write off the expired goods:
    The expired goods have no realizable value, so their cost should be written off as an expense.


Journal Entry:

  • To write off expired goods from inventory:

vbnet
Loss on Expired Goods (Expense) Dr. XXX To Inventory Account Cr. XXX
  • Explanation: Inventory asset is reduced, and the expense (loss) is recognized in the Profit & Loss account.


Additional notes:

  • If the goods were insured for such loss, then you may record the insurance claim receivable as well.

  • If the goods have some salvage value (e.g., selling expired medicines for disposal), record that value as income or reduce the loss.

  • Proper documentation and physical verification of expired goods is important before making the write-off.


CCI Pro

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register