Balance Sheet Audit with AI
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Identify expired goods:Goods that cannot be sold due to expiry must be removed from inventory.
Write off the expired goods:The expired goods have no realizable value, so their cost should be written off as an expense.
To write off expired goods from inventory:
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.
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.
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