Inventory Cards and Valuation Methods: A Practical Guide

School: University of South Australia - Course: ACCT 5011 - Subject: Accounting

Inventory cards Stock/Inventory cards are used to record the ledger information, the stock cards are then summarized in the Inventory Control account in the General Ledger. The inventory valuation method, Identified cost or FIFO, will determine how the inventory card is used. Example - Completing Inventory Cards Identified Cost White Goods Online stocks refrigerators. The business uses the identified cost method to measure the cost of inventory sold. 1/4Balance 15 @ $300 1/4Sold 3 @ $300 5/4Bought 10 @ $320 10/4Returned 2 units bought on the 5th 15/4Sold 1 unit @ 320 and 5 units @ $300 17/4Customer returned 1 unit bought for $300 20/4Bought 4 units @ $330 30/4Stock take revealed 8 units @ 300, 7 units @ 320 & 3 @ 330 DATEDETAILSINOUTBALANCE QtyPriceAmtQtyPriceAmtQtyPriceAmt Note: Sales returns are recorded as a negative in the 'out' column. However, it can also be recorded in the 'in' column as the stock is being returned. Similarly, purchases returned to the supplier are recorded in the 'in' column as a negative. However, this can also be recorded in the as an 'out' as stock is going back to the supplier. DrInventoryControlCr

Example - Completing Inventory Cards FIFO The following is an example showing the completion of a stock card using the FIFO method for White Goods Online. All transactions are made in cash. 1/4Balance 15 @ $300 1/4Sold 3 units 5/4Bought 10 units @ $320 10/4Returned 2 units bought on the 5th 15/4Sold 6 units 17/4Customer returned 1 unit bought on the 1st 20/4Bought 4 units @ $330 30/4Stock take revealed 18 units DATEDETAILSINOUTBALANCE QtyPriceAmtQtyPriceAmtQtyPriceAmt