How to account the scraped stock

Dear if your going to do scrap sales then entry will be: bank a/c dr. Scap sales a/c credit (also make entries for vat) . Secondly if you are going to show damages then the entry will be damages to jewellery dr.(expense) to stock a/c credits. ( but in this case may be use have to reverse input vat credit of the same so please check your state vat for the same) i hope answer is clear to you. Regard

The first step is to record such unsold jewellery inventory at cost or net realisable value whichever is less. In given case the NRV (relisable value of metals like diamond and gold as per your question) is less than carrying cost therefore reduction in carrying value is recorded as charge in P&L. On giving those metals to manufacturer it may be recorded as sale provided the risk and reward of ownership get transferred.