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Stock valuation

Parikshit Bapat (Jr. Accountant) (37 Points)

13 March 2012

Hello,

I am Working with a Trading firm of stationery products.

We procure A4 Size Paper Rim say 1000 Rims @ Rs. 200 each and paid a Excise Rate of 10.3% on the same. We do not have Excise setoff. Now for stock valuation purpoe, should we consider a total value paid i.e Rs. 2,20,600 as a stock valuation which results in Rs. 220.60/ Rim (Consider Weighted Ave. Method & Opening Stock is Zero)

Is this a correct way ?

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9 Replies

Parikshit Bapat (Jr. Accountant) (37 Points)
Replied 14 March 2012

Originally posted by : Pariksh*t Bapat
	Hello, I am Working with a Trading firm of stationery products. We procure A4 Size Paper Rim say 1000 Rims @ Rs. 200 each and paid a Excise Rate of 10.3% on the same. We do not have Excise setoff. Now for stock valuation purpoe, should we consider a total value paid i.e Rs. 2,20,600 as a stock valuation which results in Rs. 220.60/ Rim (Consider Weighted Ave. Method & Opening Stock is Zero) Is this a correct way ? Have i posted wrong query ?

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Kolluru Krishna Murty (Partner) (315 Points)
Replied 15 March 2012

Yes ,your valuation should be Rs 220.60 ps/rim,since you are bearing the ED on the product.

kkm

1 Like

Bhargav K (Senior Associate/Articled assistant) (40 Points)
Replied 15 March 2012

Since you are not getting excise credit , excise duty paid is your cost for a rim of Rs.200.+ Rs20 Hence loading the Excise on the inventory is appropriate.

1 Like

Parikshit Bapat (Jr. Accountant) (37 Points)
Replied 19 March 2012

Sir,

Does This mean, The Purchase account should be debited with Rs. 2,20,600/- for 1000 Rims ?

Bhargav K (Senior Associate/Articled assistant) (40 Points)
Replied 20 March 2012

yes correct, Pariksh*t

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Parikshit Bapat (Jr. Accountant) (37 Points)
Replied 24 March 2012

Now Next to Above Situation.

If I have paid Rs. 500/- To auto for the transportation of 1000 Rims then My Total Expenses Will Be as follows

Rim Qty 1000 = 2,00,000

Excise Duty paid = 20,600

Trsportation Charges = 500

________________________________

Total Exp. for 1000 Rim = 2,21,100

Now Again the stock valuation will be Rs. 221.1/ Rim (221100/1000). Am I Correct ?

But what about the Accounting Entry in above case? (Consider the Freight is Paid in Cash to Different party)

venkata giri (senior consultant) (78 Points)
Replied 24 March 2012

Raw material A/c Dr 220600

Transportation charges A/c Dr 500

To Creditors 220600

To Creditors (Different party) 500

Parikshit Bapat (Jr. Accountant) (37 Points)
Replied 26 March 2012

This reveles that the stock valuation is not merely dependent on the Purchase Account. I need to take in to consideration the expense account as well corresponding to each GRN I made for the product.

Am I Correct ?

Parikshit Bapat (Jr. Accountant) (37 Points)
Replied 29 March 2012

I Wish To to know that, Stock Valuation will not actuallly dependant only on Purchase Account but also the corresponding Wxpense Account related to each GRN.

Am I Correct ?