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a business had an opening inventory of 180000 and closing inventory of 220000 in its financial statements for the year ended 31 dec 2015
1- inventory ac dr 180000
to statement of pl ac 180000statement of pl ac dr 220000
to inventory ac 2200002-statemnt of pl ac 180000
to inventory ac 180000inventory ac 220000
to statement of pl ac 220000
why is the 2nd answer correct? can you explain the journal entry?There is an opening debit balance on the inventory account of 180,000.
We remove the opening balance by crediting the inventory account and debiting the SOPL
We then create the closing balance for inventory by debiting the inventory account and crediting the SOPL.
These entries are explained in detail in my free lectures on inventory.
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