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The year end adjustment for closing inventory would be DR Closing inventory (SFP), CR Closing inventory (P&L).
What if the opening inventory (a DR entry in the TB) is less than closing inventory? Then we will end up with a credit balance for inventory? How should we present it on the P&L?
If opening inventory is £10 DR and the closing inventory is £15, do we put down £5 CR or do we list both £10 DR and £15 CR on the P&L?
On the SOPL we show the opening and closing inventory separately (if it is a limited company then the workings for the cost of good sold are done separately and just the cost of goods figure appears on the SOPL).
Hav you watched my free lectures on this? The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
Thanks, John. There was an exercise where they put both on the same line which somewhat confused me. I am good now. 🙂
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