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Journal Entries for Stolen Inventory

Stolen inventory is the big loss of any organisation who does the business of physical products. Products can be stolen at any time from production to sale process. So, it is necessary to record these stolen inventory through journal entries.


Following are the main steps which will be followed for passing the journal entries of stolen inventories.

1. To Calculate the Cost of Stolen Inventory

Before passing the journal entries of stolen inventory, it is necessary to find the value of stolen inventory. Following are the main steps to find it.


(a) To calculate the Cost of Inventory with Physical Counting

Appoint some special staff who will check inventory physically in the store, production centre and sale show room and updated record in special register.


(b) To Calculate the Cost of Inventory on the Basis of Book Record

Take the inventory report of book value of inventory with its book quantity of stock.


(c) To Compare Book Value with Physical Value of Inventory

Now, special staff will compare book value and quantity of stock with actual value and quantity of stock. If book value and quantity of stock is more than actual quantity and value stock, difference will be the loss due to stolen inventory.


Remember : Whole inventory will not be stolen. Some of the part may be due to spoilage, obsolescence, damage. So, it will also be deducted from balance of difference in (c) point.


2. To Pass the Journal Entries 


(a) When we will decrease the balance of Inventory in the books of Accounts

Loss of Stolen Inventory Account  or Cost of Goods Sold Account Debit

Inventory (Closing Stock) Account  Credit

(b) When we will transfer cost of goods sold to income statement

Trading Account Debit

Cost of Good Sold Account Credit

( opening stock+purchase+ direct expenses - ( Closing stock - Loss of stolen inventory)


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Accounting Education: Journal Entries for Stolen Inventory
Journal Entries for Stolen Inventory
Accounting Education
https://www.svtuition.org/2015/09/journal-entries-for-stolen-inventory.html
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http://www.svtuition.org/2015/09/journal-entries-for-stolen-inventory.html
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