Inventory Accounting Entries

All the Inventory transactions will look for the valuation class and the corresponding G.L. Accounts and post 
the values in the G.L accounts. 
  
            For Example: during Goods Receipt

            Stock Account - Dr
            G/R I/R Account  -  Cr
            Freight Clearing account - Cr
            Other expenses payable - Cr
 
            During Invoice Verification

                  G/R I/R Account - Dr
                  Vendor - Cr

When the Goods are issued to the Production Order the following transactions takes place:

             Consumption of Raw Materials - Dr
             Stock A/c - Cr

When the Goods are received from the Production Order the following transactions takes place:

              Inventory A/c - Dr
              Cost of Goods Produced - Cr                     
              Price difference - Dr/Cr
             (depending on the difference between standard cost and actual cost)

When the Goods are dispatched to customer through delivery the following transactions takes place:

               Cost of Goods Sold - Dr
               Inventory A/c - Cr

When the Goods are issued to a Cost Center or charged off against expenses the following transactions takes place:

               Repairs and Maintenance - Dr
               Inventory A/c - Cr

When the Goods are stock transferred from one plant  to another, the following transactions takes place:

                Stock A/c - Dr (Receiving location)
                Stock A/c -  Cr (Sending location)
                Price difference - Dr/Cr 
               (due to any difference between the standard costs between the two locations)

When the stocks are revalued, the following transactions takes place:

                 Stock A/c - Dr/Cr        
                 Inventory Revaluation A/c - Cr / Dr

When the Work in Progress is calculated the following transaction takes place:

                 Work in Progress A/c - Dr
                  Change WIP A/c - Cr

Physical verification /shortages and excesses :  Shortages/excesses on authorizations shall be adjusted using the physical inventory count transaction.       

*-- Shashikanth Teegala - skteegala@yahoo.co.in

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