Dear Sir/Madam In an accounting system, Damaged goods/ promo goods/ personal use( Company ) goods are shown as separate accounts. An automated entry in the system is coming as follows : Damaged / Promo/Personal Use Goods A/c Dr 100 To Inventory Account A/c Cr 100 Due to this, in Cost of sales there is difference of the 100. Can you guys please explain , how to treat damaged goods/promo goods ?
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Inventory issue - please urgent
Replies (1)
Damaged goods can be considered as abnormail items.
Abnormal items can valued at Net Realisable Value (If cost is greater than NRV).
Cost = 100
NRV = 20
While considering closing stock Abnormal items to be valued at 20. no need to pass the netry for balance 80.
Automatically it will adjust from our Gross profit.
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