I have an wholesale medicine business. On 31.03.2011 it had closing stck of medicines of Rs 2,48,700. During 2011-12, no sale or purchase took place as I decided not to continue the business. The medicines of Rs 1,26,200/- which were in stock expired their life during the year 2011-12. At the end of the yaer the closing stock were Rs 1,22,500/-[Rs 2,48,700-Rs 1.26.200/-]. What is the accounting entry for Rs 1,26,200 [expiry of medicines]?
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Life of medicine expires
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This is a major problem with industries dealing in perishable goods. The journal entry for this would be Debit Loss on Spoiled Inventory (Show It In P&L) and Credit (Active) Inventory. Hope this helps.
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