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.