Inventory Dr
To Provisions
This entry was passed by the company at the time of making the provision for incentive that may be payable to the party for meeting certain standards
But the standards were not meet and the company wants to reverse the provisions. But the inventory will go negative if the provisions are reversed.
What should the company do??????????????????
can u tell me, what kind of standards company wants to meet ?
Can you explain the scenario in detail. Cc you said the standards are not met, it means whether you may 've to return the Inventory back?
If the provision amount is only with respect to the contingent payment then it can ve.well e reversed.
Kindly explain the case in full??
Instead of having created a provision entry as
Inventory A/c Dr
To Provision A/c
you could 've created a provision entry like this
Party A/c Dr
To Provision A/c.
So that Subsequent Provision reversal when standards are not met will not affect the inventory value.
If you agree with this you will have to pass three entries subjecting to the amount of contingent payment.
1st: Provision A/c Dr
To Inventory A/c
(to the extent of such amount)
2nd: Party A/c Dr
To Provision A/c
(Rectification of wrong entry previously passed)
3rd: Provision A/c Dr
To Party A/c
(Now reversal of 2nd entry since standards are not met)
Provide a transfer entry...
Provsion (old) Dr.
to Incentives ( new a/c opened )
this will keep the velue of inventory intact :)
i think provision is an error
if it is error then it is a PRIOR PERIOD ITEM.
Provisions a/c
To Inventory ( upto the value of inventory
To Gain on Provisions ( transfered to P & l a/c)
yes i agree with aparna
AGREE WITH APARNA
Can anyone tell me is PF Act applicable to wholesale traders dealing in Stationery Products,Computer dealers(like in nehru place),...can any one explain this to me
| Originally posted by : Prateek | ||
 |
Can anyone tell me is PF Act applicable to wholesale traders dealing in Stationery Products,Computer dealers(like in nehru place),...can any one explain this to me |
 |
twenty or more persons employed on any previous day will make the establishment liable to cover and pay under Provident fund.
| Originally posted by : Prateek | ||
|
|
Can anyone tell me is PF Act applicable to wholesale traders dealing in Stationery Products,Computer dealers(like in nehru place),...can any one explain this to me |
|
if such dealers are depositing the pf dues for their employees the such act also applies otherwise not
inventory dr
to provision a/c
is insane, how can u increase ur inventory value for a contingency, if it was a clause provided in the invoice/sale document, and its occurence was more likely than not, they should have raised a provision debiting the p&l a/c or the related exp as an o/s exp, if they start raising inventory values for contingencies, profits may be inflated/ deflated and it ll be hard to find a loss making unit .
agree with Arpana
hi aLL and i appreciate understanding of mudassar.....provision is always made from p/l ....
now i assume that you can't change the entry pass earlier for making the provision from inventory....
now u immediately pass an entry
1)
Provision a/c dr
To suspense a/c
and wen u got the sufficient balance in inventory a/c..then
2)
Suspense a/c dr
to Inventory...
because we also need to corrct the inventory a/c......so that it shows the real physical inventory stock with u....
pls write if u had any confusion....
CAclubindia
