Chapter 8: Accounting for Inventory Flashcards
How is inventory valued?
At the lower of cost and net realisable value
What are the journal entries to account for closing inventory?
Dr Closing Inventory SFP (asset)
Cr Closing Inventory P&L (cost of sales)
What are the journal entries to account for opening inventory?
Dr Closing Inventory P&L
Cr Closing Inventory SFP
Define irrecoverable debts and doubtful receivables.
An irrecoverable debt is a debt that will not be recovered.
A doubtful receivable is a debt in which there is a question as to whether it will be settled.
What are the journal entries to account for an irrecoverable debts?
Dr Irrecoverable Debt Expense
Cr RLCA
What are the journal entries to account for an irrecoverable debts?
Dr Allowance for doubtful receivables adjustment
Cr Allowance for doubtful receivables
What are the journal entries to recover an irrecoverable debt previously written off?
Dr Bank
Cr Irrecoverable debt expense
