How do you, in the books, items that are ether:
a) stolen
b) items that have been returned broken and cannot be returned to the distributor?
At the moment we are not showing them at all
Cheers
How do you, in the books, items that are ether:
a) stolen
b) items that have been returned broken and cannot be returned to the distributor?
At the moment we are not showing them at all
Cheers
I use an expense account called Shrinkage for stuff that's wandered off in manner unknown.
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Pap_sak (15-Feb-11)
Cheers for that Dave.
So you treat this as an expense? And do you keep some sort of record? Obviously stock is treated as an asset, so you write the shrinkage expense off stock. That seems to make sense, my bookkeeper seemed to think there was nothing to write off...
Basically, you write stolen items off as an expense, typically "Loss due to theft" in your Income Statement. (This decreases your inventory in your books.)
As for the damaged stock, this is slightly more complex, but you have the just of it. Inventory can only be valued at it's net realisable value. Thus, it stands to reason that you should decrease the value of your stock by passing off an expense. For this, Dave's suggestion of a shrinkage account is perfectly acceptable.
I would keep records of both. How have you determined that stock was stolen? During a stock count?
For your damaged stock just keep copies of the credit notes etc. (Documentation pertaining to those particular transactions) You could also keep a separate register of all similar transactions, for completeness' and ease of reference's sake.
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Pap_sak (15-Feb-11)
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