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Hi sir,
I am not able to understand the adjustment for Inventory, recievables and payables in this qstn.
The qstn says that boo co dispatched goods which cost 80000$ to goose co at an invoiced Cost $100000.Goose co received the goods on 2 jan 2009 and recorded the transaction.
I did this question and I see the answer also but I am not able to get it this whole part and I see in adjustment when we do for inv, rec, payable. Can you please explain me how to deal with this part and how to do adjustment for this 3 parts in SOFP . Thanks in advance
Hi,y
This is inventory in transit. To adjust for this you firstly need to record the inventory in the group accounts (Dr Inventory Cr Payables) and then eliminate any unrealised profit (Dr RE CR Inventory). You then need to remove the intra-group balances (Dr Payable Cr Receivables).Try it out with what I’ve suggested above and then let me know how you get on.
Thanks
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