Can anyone please help

tinkerella

There is a question on my simulation and we have not covered it in class.

I have to write off some paint which is now obselete.

The original cost was £550, how would i write this off and show the adjustments in the extended trail balance.

I'm at a complete loss with it.

I know you have to use the lower of cost or Net realisable value

TIA

X X X

crispy

Write off of old obsolete Stock:

Dr Cost of Sales (Or Purchases) (P&L)£ 550
Cr Closing Stock (Balance Sheet) £ 550

You are increasing Cost of Sales in the P&L, and decreasing the Stock Value on the Balance Sheeet.

sdv

tinkerella wrote: »

There is a question on my simulation and we have not covered it in class.

I have to write off some paint which is now obselete.

The original cost was £550, how would i write this off and show the adjustments in the extended trail balance.

I'm at a complete loss with it.

I know you have to use the lower of cost or Net realisable value

TIA

X X X

You are right

This is SSAP 9 related question

You have to reduce the closing Stock by £550 because NRV is zero

Debit Closing Stock P&L £550

Credit Closing Stock BS £550