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Hi Sir,
A company conducted the inventory count on the last day of this year.
$1000 of clothes were not included during inventory count as GDNs were raised. But these goods were despatched only next day as the pickup of goods didn’t arrive. The invoices for this sale was included in the next periods first day on the sales day book . What must be done now to remove any error in FS ?1. Do nothing as everything is recorded
2.add the sales invoices into the sales day book of this year
3. Include the clothes back to inventory at year end and include sale in sales day book of this year
4.inlcude clothes back to inventory at year end at selling price.I understand that first and last option is wrong. Can’t include it at selling price as it’s not sold yet so must adhere to lower of cost and nrv.
Answer is 2 but I don’t understand why
Also why is 3rd wrong ?Please explain
Thanks in advanceHi,
The goods were sold on the last day of the year, so need to be recorded as sales in the sales day book. We cannot just omit the sale as the pick up was delayed by one day, the sale has taken place and the goods are no longer ours, so cannot be included in the year end inventory figure.
So, 2 is right as the sale took place this year, and 3 is wrong as we cannot include the sale and the goods, only the sale is recorded.
Thanks
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