How would we record stolen goods on a financial position worksheet?
Using double entry accounting, how would we record stolen goods on a financial position worksheet? For example, if $1000 worth of goods is stolen, how would I record that? Thanks in advance!
Stolen goods just become part of the Cost of Goods Sold account (after all, it’s pretty much the same as if a physical inventory count reveals that inventory is $1,000 less than the amount shown on the books). The entry is:
Debit "Cost of Goods Sold’ $1,000 [expense account]
Credit ‘Merchandise Inventory’ $1,000
This entry serves to reduce the amount carried on the books regarding inventory, and also serves to reduce net income because COGS is an expense account.
February 10th, 2010 at 11:15 am
Stolen goods just become part of the Cost of Goods Sold account (after all, it’s pretty much the same as if a physical inventory count reveals that inventory is $1,000 less than the amount shown on the books). The entry is:
Debit "Cost of Goods Sold’ $1,000 [expense account]
Credit ‘Merchandise Inventory’ $1,000
This entry serves to reduce the amount carried on the books regarding inventory, and also serves to reduce net income because COGS is an expense account.
References :