Theft of stock

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Please help!!<BR><BR>Does anyone know how to deal with the theft of stock in the Trial balance?<BR><BR>I cant remeber the question in detail but it was basically to work out the amount of stock stolen and then adjust it in the trial balance by adding an extra like called 'theft'.<BR><BR>Pleeease, if anyone knows how to do this adjustment, let me know.<BR><BR>I have to complete this question on Thurday and i dont have a clue, the bbp dont seem to help either.<BR><BR>Thank you in advance. <BR><BR>PLEASEEEEE PLEASEEEE PLEASEEEEEEEEEEE

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Theft of stock

    If you have the closing stock figure in your TB then I think (only think) that you have to Work out what the new figure should be - then you would make the old figures the correct ones with an adjustment! <BR><BR>Then you would Debit the Closing stock - trading account and<BR>Credit Closing stock - balance sheet <BR><BR>Then this would bring the 2 stock figures down to the correct amount.<BR><BR>Amanda
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Theft of stock

    Hi Sara.<BR><BR>The problem with loss of stock, whther through theft or damage, such as fire, is that if you simply adjust the value, you are not reporting correctly.<BR><BR>Remember SSAP9 - stock to be valued at the lower of cost or net realisable value.<BR>- If the stock is damaged, but saleable, then you value it at the NRV.<BR>- If it's stolen, then it has no value. However, your gross profit will then be based on an unrealistically high purchases figure. Therefore, you have to Credit Cost of Goods Sold (reduce the value of purchases) and Debit the P&L Stock Losses (this is the expense of the loss).<BR><BR>There is a good answer to this on the Accounting Technician website at:<BR><a target=new class=ftalternatingbarlinklarge href="http://www.accountingtechnician.co.uk/archive/?edname=457.htm&ped=457.">http://www.accountingtechnician.co.uk/archive/?edname=457.htm&ped=457</a><BR><BR>Hope this helps.<BR><BR>Best wishes for the exam.<BR><BR>Mike<BR>
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Theft of stock

    Thank you, that has helped loads but i'm still having a bit of trouble understanding it. :-(<BR><BR>I origianally thought the same thing as Amanda258 - but i'm not sure how to put the adjutment through on the TB.<BR><BR>The question says that i need to add on an extra line in the trial balance called 'theft'. <BR>The opeing and closing stock figures are given and some other information so we can work out the stock stolen - once this is determined, they then want us to adjust the TB for this stolen stock.<BR><BR>To record the stolen stock, would i then ;<BR><BR>Dr Theft a/c (P&L as an expense)<BR>Cr Stock (to reduce the figure)<BR><BR><BR>I'm just having trouble working out exactly what accounts in the Trial Balance, i need to make entries against.<BR><BR>Ahh..i'm such a pain, but this is stressing me out big time. I'm just being really thick.<BR><BR>All help is GREATLY appreciated.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Theft of stock

    Hi there ,<BR><BR>I have few points to make regarding the treatment of theft of stock ,which i would like to dicuss with you :<BR><BR>Firstly how is this found at year end ? in other word,how can we realise the stock has been stolen?<BR>As we all know the closing stock figure is calculated physically, which means this figure is correct ,this figure has already included the loss of stock ;<BR><BR>Secondly ,how can we find out the amount of the stolen stock?<BR>In question or even in exam , we all will be given certain information such as opening stock sale purchase etc ,using all there information we can easliy work out the amount of the closing stock ,the difference between the two closing stock figures is the loss of the stock ;<BR><BR>Thirdly what is the correct treatment of the theft stock?<BR>i think the entry will be <BR>Dr loss of stock ( expenses) Cr purchase<BR><BR>Any disagreement or sugesstion ?please let me know i also would like to make this topic more clearly <BR>chaoliss
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Theft of stock

    This is the simulation question isn't it?! If you actually read the question it says to set up an expense account called Theft and increase Sales amount.<BR>
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Theft of stock

    Hi There<BR><BR>Yes, that's right. It is in a simulation.<BR><BR>I did read the question quickly. <BR><BR>How would i go about setting up the expense account and does the increase in sales need to be the adjustment in the TB?<BR><BR>Would the entry therefore be Dr Theft a/c and Cr Sales?<BR><BR>We did this simulation and are finishing it off tomorrow. Have you done this sim? <BR><BR>Thankyou so much for your help, it is greatly appreciated.<BR>

Categories

Privacy Policy