Closing Inventory in the Extended Trail Balance

MCHitch · October 2016

Hi all, first post so thought it might as well be a question. I am working on the Extended Trail Balance and I am confused why Closing Inventory is posted both to the SoPL and the SoFP. Can anyone tell me why?
Thanks, Matt!

Adele69 · October 2016

Not that I'm very good at explaining things though was doing a bit of refresher on ETB yesterday.

On the practical side. In SoPL you will have Opening Inventory as an Expense, and need as part of Cost of Sales calculation (Opening Inventory + Purchases - Closing Inventory). In SoFP as a Current Asset, along with Trade Receivables and Bank/Cash (when not in overdraft).

Opening Inventory (expense /SoPL / debit)
Closing Inventory (adjustment to expense/SoPL /credit)

Closing Inventory, or just Inventories (current asset /SoFP /debit)

MCHitch · October 2016

Thanks! So as Closing Inventory is part of the CoS calculation, it will need to be entered SoPL and also in the SoFP as it is also an Asset.

Closing Inventory in the Extended Trail Balance

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