Lost/Damaged Stock
T.C.
Registered, Tutor Posts: 1,448 Beyond epic contributor 🧙♂️
How do I account for stock purchased, which was found to be unsuitable for sale?
My client purchased £4,000 of ink cartridges and 3 dvd players (from different suppliers). All these ones were faulty but they would not accept returns - don't ask me why!
He wants these to go in the accounts as lost stock - how would you put them in the books - damaged stock perhaps? - in cost of sales? :confused1:
My client purchased £4,000 of ink cartridges and 3 dvd players (from different suppliers). All these ones were faulty but they would not accept returns - don't ask me why!
He wants these to go in the accounts as lost stock - how would you put them in the books - damaged stock perhaps? - in cost of sales? :confused1:
0
Comments
-
If the purchase invoice has gone through the records and the stock is valued excluding them (as there’s no realisable value) it is already reflected in the GP.
Only if it made a significant difference to the GPM would I consider noting away from the COGS. It would also possibly bring a Revenue question by noting separately.0 -
This is an awkward one, because if I include it all in cost of sales, then the gross profit is a significant loss and this will ring alarm bells in itself! Any ideas?0
-
Assuming it's a sole-trader then it doesn't really matter where you put it.
If you do not want it to go in COS then put an extra expense code in the accounts as 'Loss on damaged stock'. I would probably bundle it up in administration costs on the tax return.
If it's a company then you can't really hide it anywhere. HMRC will see the detailed P&L anyway.0 -
I agree with Dean S in debiting a written off stock (or whatever you want to call it) line, below GP.
If ever I get a situation where ratio's are really different from a prior year, because of unusual events or even commercial events then I include details in the white box on the tax return.
If this is a genuine situation then why hide it
Poodle0 -
Basically, this is the first year of trading for the small self-employed business and he has takings recorded at approximately £9,000 and cost of sales at £15,000 - won't it raise the alarm bells like that?0
Categories
- All Categories
- 1.2K Books to buy and sell
- 2.3K General discussion
- 12.5K For AAT students
- 321 NEW! Qualifications 2022
- 159 General Qualifications 2022 discussion
- 11 AAT Level 2 Certificate in Accounting
- 56 AAT Level 3 Diploma in Accounting
- 92 AAT Level 4 Diploma in Professional Accounting
- 8.8K For accounting professionals
- 23 coronavirus (Covid-19)
- 272 VAT
- 92 Software
- 274 Tax
- 136 Bookkeeping
- 7.2K General accounting discussion
- 201 AAT member discussion
- 3.8K For everyone
- 38 AAT news and announcements
- 345 Feedback for AAT
- 2.8K Chat and off-topic discussion
- 582 Job postings
- 16 Who can benefit from AAT?
- 36 Where can AAT take me?
- 42 Getting started with AAT
- 26 Finding an AAT training provider
- 48 Distance learning and other ways to study AAT
- 25 Apprenticeships
- 66 AAT membership