Adjustment of entries on uclaimed Purchase Order

A/c entries 554 views 2 replies

ranjitkarmakar

service

313 Points Joined May 2008

Dear Sir,

Please any one help me related to necessary accounting entries for how to adjust unclaimed Purchased Order lying for long period in any manufacturing organisation. Suppose any one given a purchase order in the year 2008 for Rs. Ten lac and against the purchase order client give a Rs. One lac advance as a token money, the delivery date was decided March 2008 as mutual agreement. But the said purchased order till lying in the factory till date as unclaimed. So now it is become scrap for manufacturing organisation, it can not be sale to other client as it was a tailor made item. The manufacturing organisation is now become faces losses for the said unclaimed stock. So how the entries will be passes in the books of accounts. Please Help Me.

Ranjit

Replies (2)

JITENDRA KUMAR DHINGRA

Executive

93 Points Joined July 2009

Dear Sir,

In accordance with the accounting standard 2,Closing stock should be valued at NRV or cost whichever is less. In this above case stock has nil realisable value,but u have recd. advance against against it. So the stock should be shown at nil and amount received against it should treat as income.reduced amount of stock shall automatically charged to the profit.

Thanks N Regards

Jitendra