Accounting treatment of expired goods

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:

• 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.