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Closing stock

wnr (ABC) (30 Points)

04 March 2010

Hello,

Our client is a trader (does not keep stock as Vendor purchase material is directly sent to the Customer), but this time they have some stock present with them.They have physically valuated the stock now.How to make the accounting in such a scenario....which GL to be opened & which accounting entries to be made.

Please help.

Regards,

WNR

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8 Replies

CA Uday Bhan (Manager Internal Audit) (49 Points)
Replied 04 March 2010

Hi,

Are you maintaining accounts manually or using computer? if maintaning accounts on computer which software are you using for this purpose ?

Pls specify.

Regards

-Uday

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wnr (ABC) (30 Points)
Replied 04 March 2010

Using SAP....the solution which we had provided to the client is

Closing stock a/c Dr

Purchase a/c Cr

They are not ready for this entry.

MAGESH.G (STUDENT) (195 Points)
Replied 04 March 2010

SInce the company is only a dealer or trader, the Inventory Module in SAP cannot be used. So , amanual entry has to be passed

wnr (ABC) (30 Points)
Replied 04 March 2010

how to pass the manual entry....which accounts to be used???

CA Uday Bhan (Manager Internal Audit) (49 Points)
Replied 04 March 2010

For learning about transactions you have to go to the site www.freesaptutorials.com details are available this website.

by the way your client using SAP sytem (Software) but entries are not paased in SAP is just surprising.

I think your client wants the entries for stock physically available, if so suggested entries are:

For excess stock;

Relevant stock item Dr.

Sundry purchases/stock adjustment a/c Cr.

For shortage:

Reverse entries to be passed.

Hope it will beneficial to you.

-Uday

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CA Uday Bhan (Manager Internal Audit) (49 Points)
Replied 04 March 2010

Please don't suggest stupid type entries to your client as u written down-

[Closing stock a/c Dr

Purchase a/c Cr]

Before any suggestion you should ask first to seniors because it will affect your personality and image.

-uday

wnr (ABC) (30 Points)
Replied 05 March 2010

Originally posted by : CA Uday Bhan
	Please don't suggest stupid type entries to your client as u written down- [Closing stock a/c Dr Purchase a/c Cr] Before any suggestion you should ask first to seniors because it will affect your personality and image. -uday

Please check the following :-

» Debit : Closing Stock a/c

Accounts representing assets are real accounts and show a debit balance. Since by recording the journal entry for bringing the value of closing stock into books, we are creating an asset by name "Closing Stock a/c" we debit that account.

[Closing Stock a/c – Real a/c – Debit what comes in.]

» Credit :

There are three possible variations in the account to be credited for recording the value of closing stock.

Trading a/c
Goods Consumed a/c
Purchases a/c

The ledger account to be credited is dependent on which account is used to reflect the value of cost of goods sold as well as the time of recording the entry.

Thats the reason Closing stock Dr, Purchase a/c Cr...entry was suggested...

Would appreciate if proper language is used in the forum.

regards,

wnr