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Prior year errors

This topic has 1 reply, 2 voices, and was last updated 8 years ago by MikeLittle.

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November 7, 2016 at 1:11 pm #347848
jaydenlee
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In a case where there’s prior year overvaluation of inventory, for instance £10,000 of goods sold were included in the closing inventory.
Can I know what are journal entries needed for the adjustment?
November 7, 2016 at 1:16 pm #347850
MikeLittle
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In last year’s records, increase cost of sales and therefore reduce profit for last year
That gives a reduced figure for retained earnings carried forward into this year and a corresponding reduced figure for inventory carried forward into this year
OK?
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