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accountinginventoryinventory_countadjustment
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Anthony Iloenyosi

I would like to find out how to treat the accounting entries when I am carrying out a perpetual inventory adjustment. 

Current steps to recreate problem:


1. Product Category is using FIFO costing method and Automated Inventory Valuation


2. Carry out an Inventory Adjustment for annual stock for the organisation


3. The accounting entries currently being made are credit to the Stock Valuation (Interim) Account and debit to the Stock Valuation Account 


so for example the inventory adjustment leads to a $500 credit to the stock valuation interim account and a $500 debit to the stock valuation account

question: 

I would like to find out the correct contra account that I should use to pass the entry to nil off the $500 in the Stock Valuation (Interim) Account as this value is still sticking out in the balance sheet and leading to wrong reporting. 







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Chris TRINGHAM
Best Answer

I'm not an accountant, but I think the posting should be:

CR

Stock Valuation (Interim) Account

DR

Cost of Goods Sold


But you could use another Expense account 

Also, it's better to use a different account for inventory adjustments, as explained here.

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