Can anyone please help

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tinkerella
tinkerella Registered Posts: 45 Regular contributor ⭐
in AAT Level 3 (Level 6 in Scotland)
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

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  • crispy
    crispy Registered Posts: 466 Dedicated contributor 🦉
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    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 Registered Posts: 585 Epic contributor 🐘
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    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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