Entry for melting old gold in tally

You have to debit your purchases only to the tune of Rs.4,00,000/-  for  100 gms and if you are maintaining an inventory model in tally then the loss of  9 gms of gold should be accounted in tally by way of stock journal showing your consumption 9 gms with  value of cost. this would reduce your stock value to the tune of 36000/- and the closing stock value would be displayed in the profit and loss account. for Rs. 3,64,000/-This would be possible only you opt  for the inventory system and your closing stock is as per tally records.

But thats the thing, since purity of my gold is increasing and quantity is decreasing then i have to account for consumption for only 1 gram (since 100 gms of 22 carat gold would have 92 gram of pure gold). if i account for 1 gram in consumption ( i should have gotten 92 grams pure gold but 1 gram got lost in melting process, and i got only 91 gms) how should i account for 8 gms that would have been alloys and maintain value of good which is Rs 400000. - whatever loss incurred on loss of 1 gram of gold.

please note that my reasoning is when purchased old gold i paid Rs 400000 considering purity of gold so the amount i paid is wholly for 92 grams of gold and decreasing value of such gold by 36000 would be incorrect

Originally posted by : kartikgowadia
	in jewelry business opd gold is purchased from the customer, after that it is melted and converted into pure goldsay 22 carat of old gold purchased (qty - 100 gms, amount paid-400000) now after melting i get 91 gms of 24 carat gold how am i to pass such entry in tally??

Are You maintain stock wise details...?

If Yes... Is maintain as Trading or Manufacturing...?

Are You converted from 22 to 24 with Value...?

 

Stock is maintained in bulk (i.e. say i have 10 chains of 10 gms each and 20 rings of 2 gms each then my stock will show stock of 140 grams in total)

it is maintained as trading stock

and say if i purchase old ornament of 100 gms(22 carat i.e. 92% purity) and i melt it i would get 92 gms of pure gold(24 carat i.e. 99.9% purity), if i purchased that old gold for say Rs 400000 and melted it to get pure gold it would have same value of Rs 400000 since quantity is decreased but purity has increased

Considering the purity factor the value of gold in hand would be Rs. 400000/92  which is 4347 per gram and to the extent the value of your stocks will get adjusted (91*4347) and your process loss  would be (1*4347) 

Yes but how would you account for is so that my stock of 100 gms of old gold converted into 91 gms of pure gold while retaining value and my books show quantity as 91 gms of pure gold in the end, the problem i am having is how to enter it in tally

Its Your wastage... This is accountable in PandL account.

Shortage will be solve through Stock Journal from Old to New...

I Agree wit what Mr. Sivaramakumar suggested. I recommend that only as the right approach.
My reasons as follows:
1. you bought the lower quality gold(let's say raw material) and then converted it into better product in that process you lost 36000 k worth materials as wastage and the quantity of wastage was also 9 gms which is correct.
2. Your product that's new gold of 24 carat was the product of processing you had to make it go through like heating and purifying the earlier 22 carat etc. which has to be accounted for as processing costs.
3. Since you've received your purified gold and it's cost in inventory now is 400k - 36k.
4. the wastage of Worth 36k to be included along all other processing costs.

The only solution is  that you mark your stock in physical stock journal as 91 gms so that the stock summary would display the transaction rate at 4395/-  for the purchase cost of  400000/- for the sake of your convenience. But still the loss would be factored in your closing stock value.as long as you hold the stock as it is. Only when you  sell above  4395 your notional loss gets reduced  in the books .

Received from abir Pvt Ltd in cheque 225555555555. 4673 of UBI against bill s1342 And the same wasdeposited in ICICI bank

OLD GOLD  ENTERY 

Using full cost plus pricing, opportunity costs are irrelevant here and normal costing method must be used to record scrap and value inventory. But selling price usually has a markup. 

Pure gold 500 gms issued to goldsmith for converting into gold jewellery and received 550 gms of gold jewellery

How to enter it in tally 

Agreed with Sivakumar , 2 Entries you will have to make. 1st is the Stock Journal where you have debit to 24 Carat Gold -in quantity column -it will be 92 grams-take value as pr your calculation. & Credit to the 22 Carat Gold & in quantity column -100 grams. - took value as per calculations.

 

2nd entry is the optional, if any loss happened in whole process , then you will have to make a journal entry .