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Inventory

Accountancy

Sir in inventory if we purchase in March but we received on April before counting what we do that sir in trading account. if we receive goods after calculating inventory what to do.

Jashwanth S

CMA Inter

★ 2K+

05-May-20 08:44

334

Answers (4)

Goods in transit should be included in inventory if the legal ownership is transferred before the cut off date. Counting or quality inspection are secondary. Everything depends on shipping terms, if the legal ownership is transferred before counting then include but if legal ownership transfers only after counting then dont include.

Sudha Reddy

CA Final

★ 20K+

05-May-20 08:54

OK but we have to record in trading account credit side

Thread Starter

Jashwanth S

CMA Inter

★ 2K+

05-May-20 08:56

Already we know sales and closing stock only comes in credit side then what we do that transaction

Thread Starter

Jashwanth S

CMA Inter

★ 2K+

05-May-20 08:58

When a purchase happens you would increase the purchases and if not sold it would be shown as closing stock. Once you have recorded a purchase and accounted for it and because it is not sold you will include it in closing stock. If the stock is not yet received, it will be accounted as stock in transit.