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:

You may also be interested in other relevant articles:

• 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 for materials received and issued.
• Cost of acquiring materials.
• Storage and use of materials.
• Materials ledger card--perpetual inventory system.

Materials Costing Methods:

• First-in-First-Out (FIFO) Costing Method
• Average Costing Method
• Last-in-First-Out (LIFO) Costing Method
• Other Materials Costing Methods--Month end average cost, last purchase price or market price at date of issue, and standard cost.

Cost of Materials in Inventory at the end of a Period:

• 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

Costing Procedures for Scrape, waste, Spoiled Goods and Defective Work:

• Cost accounting procedure for scrap and waste
• Cost accounting procedure for spoiled goods
• Cost accounting procedure for defective work

 

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