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Well i want to clear one thing that is if goods are received from suppliers before year end and no invoice is received from the supplier till year end.
What will be the effect on FS. How auditor’s will ensure cut-off. Will goods to recording in stock or not?
Please advise by journal entry for these goods. thanksIf goods are received before year end then they will be included in closing inventory. Closing inventory has its own journal entry;
Dr Inventory on Statement of Financial Position
Cr Inventory on Income statement (by reducing cost of sales).Additionally, if no invoice has been received at year end we have to make sure that the closing inventory item is also booked in as a purchase. Therefore;
Dr Purchases (IS)
Cr Purchase reserve (SOFP)If the firm will not have received the invoice by the year end then what price of the product will be posted in the purchase reserve?
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