Adjusting Materials Ledger Cards and Accounts to Conform to Inventory Accounts – Inventory Valuation
Adjusting Materials Ledger Cards and Accounts to Conform to Inventory Accounts – Inventory Valuation
When the inventory count differs from the balance on the materials ledger card, the ledger card is adjusted to conform to the actual count.
if the ledger card balance shows more materials units than the inventory card, and entry is made in the issued section; and the balance section is reduced to equal the verified account. In case the materials ledger card balance is less than the physical count, the quantity differences may be entered in the received section or may be entered in red in the issued section with the balance section being increased to agree with the actual count.
In addition to the correction on the materials ledger card, the materials account must be adjusted for the increase or decrease. If the inventory count is less than that shown on the materials ledger card, the following journal entry should be recorded:
Factory Overhead control |
xxxx |
Dr |
Materials |
xxxx Cr |
|
Inventory adjustment to physical control |
You may also be interested in other useful articles from “controlling and costing materials” chapter:
- Purchases of productive material
- Purchases of supplies, services, and repairs
- Materials purchasing forms
- Receiving materials
- Invoice approval and data processing
- Correcting invoices
- Electronic data processing (EDP) for materials received and issued
- Cost of acquiring materials
- Storage and use of materials
- Issuing and costing materials into production
- Materials ledger card – perpetual inventory
- First-in-First-Out (FIFO) Costing Method
- Average Costing Method
- Last-in-First-Out (LIFO) Costing Method
- Other Methods-Month end average cost, last purchase price or market price at date of issue, and standard cost
- Inventory valuation at cost or market whichever is lower
- American Institute of Certified Public Accountant (AICPA) cost or market rules
- Adjustments for departures from the costing method used
- Inventory pricing and interim financial reporting
- Transfer of materials cost to finished production
- Physical inventory
- Adjusting Materials Ledger Cards and Accounts to Conform to Inventory Accounts
- Scrap and waste
- Spoiled goods
- Defective work
- Discussion Questions and Answers about Controlling and Costing Materials
Other Related Accounting Articles:
- Adjustments for Departures from the Costing Method Used–Inventory Valuation
- Inventory Audit Method
- Difficulties Encountered in Process Costing Procedures
- Addition of Materials – Increase in Unit Cost
- Discussion Questions and Answers
- Beginning Work in Process Inventories
- Addition of Materials – Increase in Units and Change in Unit Cost
- Beginning Work in Process Inventories
- Inventory Conversion Period
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