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Feb 10, 2010 at 08:43 AM

Extend financial postings of waste transactions to include P&L Stock & Purc


Hi! Gurus

In NZ and Australia Balance Sheet stock at the end of a period should reflect P&L Closing Stock for the same period. It is an audited practice to reconcile balance sheet stock to profit and loss stock. Thus while Opening stock for a new year is a reflection of balance sheet stock at the end of the last period, so too should it always be a reflection of P&L Closing stock of the outgoing year. There are not two stocks of inventory, just the one u2013 reported on both BS & P&L, hence the balances there-in should be a mirror image of each other.

Current Process:

At the time goods receipts the accounting are as follows:

Dr. Stock Account (Balance Sheet)

Cr. GR/IR Account

Dr. Purcashe Account (P&L)

Cr Purchase offsetting Account P&L

When we scrap material, the accounting as below

Dr Waste Expneses (P&L)

Cr Stock Account

The requirement:

In order to reconcile with Stock Account we need to include Purchase Account during waste transaction.

The expected accounting is as follows:

Dr Waste Expneses (P&L)

Cr Stock Account

Dr Inventory Difference (P&L)

Cr Purchase Account (P&L)

Could you please share your thoughts on it.

Best Regards