Can anyone please help

tinkerella
tinkerella Feels At HomeRegistered Posts: 45
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

Comments

  • crispy
    crispy Trusted Regular SouthamptonRegistered Posts: 456
    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
    sdv Experienced Mentor Registered Posts: 585
    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
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