Inventory Adjustments Account for Income Statement II - The Sequel

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Posted on by john.ellis

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Hi:

There is an Inventory Adjustments account in the cost section of the chart of accounts containing a large negative balance, because the beginning costs and quantities for the new inventory items were posted in the Item Journal earlier this month.

Since this results in a large figure in the cost section of the income statement and since this was the beginning of the posting of inventory costs and quantities for these new items, from an accounting standpoint is there a way to "write this off" so that these inflated figures do not appear on the balance sheet or income statement?

Thanks!

John

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john.ellis 3,482 on at

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RE: Inventory Adjustments Account for Income Statement II - The Sequel

Thanks, Kim!

John
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Dallefeld 11,425 User Group Leader on at

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RE: Inventory Adjustments Account for Income Statement II - The Sequel

Basically, you should post a journal entry that reverses the accounting affect of the item journal load.
john.ellis 3,482 on at

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RE: Inventory Adjustments Account for Income Statement II - The Sequel

That is exactly what I did. But, that's a pretty large amount showing now on both the balance sheet and income statement.

Any ideas?
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Dallefeld 11,425 User Group Leader on at

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RE: Inventory Adjustments Account for Income Statement II - The Sequel

John, you should debit the Inventory Adjustment account and credit the Inventory Account on the balance sheet. Your Inventory account on the balance sheet will be populated when you enter your beginning general ledger balances.