FRA - discounts received & reducing Work in progress

System
System Posts: 100,534 🤖 Admin 🤖
edited 10:32AM in AAT student discussion
Hi,

I am struggling with a question that is looking at creating journals to show how to reduce the work in progress total at 31/3 due to discounts.

the senario is that a company has decided to charge a customer 1000 less for the work they are carrying out. the balance of the WIP account @ 31/3 is 80,000. the work is in the WIP account as 3,000 - but needs to be amended to be only 1,000.

Can anyone offer me any advice on the journals i need to do to action the amendment?

Many thanks!

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:FRA - discounts received & reducing Work in progress

    does no one know?! im quite shocked!! glad its not only me then!!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:FRA - discounts received & reducing Work in progress

    Hi,

    I think in order to adjust the closing Work in Progress you would just,

    Dr Closing WIP (Profit & Loss) 2,000
    Cr Closing WIP (Balance sheet) 2,000

    This would give a closing figure of 78,000 for WIP on the Balance sheet.

    Hope this is ok :)
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:FRA - discounts received & reducing Work in progress

    Yup, that would be the way you would reduce your WIP.

    I only know cos I have to reconcile a WIP account each month in my management accounts :wink:

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