| Merchandising Inventory Accounting
Protocol
When goods are purchased from a vendor for resale to users, the invoice
price of the items along with any costs pertaining to the procurement and
receipt of the items for resale, should be recorded in FAS inventory account
control 1530-1539 in Ledger 0.
Upon the sale of the item to a user, the cost of the item and its related
costs are transferred from the inventory account to a Ledger
2 cost of goods sold expenditure subaccount
in the 0991 through 0998 range.
A physical count of the inventories must be taken each fiscal year end
and reconciled to the balance in the inventory account. A representative
from the Comptroller's Office should observe the count. The general ledger
account control, which records the book value of the inventory at the time
of the physical count, should be adjusted to reflect the value of the actual
count in the case of discrepancies.
| A. |
To record the purchase of goods by a recharge operation
from a vendor. |
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(Purchase requisition form) |
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Debit: |
Recharge operation inventory |
0-12XXX-15XX |
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Credit: |
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Recharge operation cash |
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0-12XXX-1100 |
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| B. |
To record the sale of an inventory item to a user of
the recharge operation. |
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(Comptroller's Form 62) |
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Debit: |
User's expense account |
X-XXXXX-XXXX |
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Credit: |
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Recharge operation income account |
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2-XXXXX-08XX |
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Explanation: To record sales revenue generated
by the sale of an inventory item to a user. The amount is equal to the
sum of the cost of the item sold plus the recharge operations markup. |
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Debit: |
Recharge operation cost of goods sold |
2-XXXXX-099X |
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Credit: |
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Recharge operation inventory |
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0-12XXX-15XX |
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Explanation: To reduce inventory for sale of
an inventory item to a user. The amount is equal to the cost of the item
sold. |
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| C. |
To adjust the inventory account control in the general
ledger (Ledger 0) to the actual count. |
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(Comptroller's Form 60) |
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If the cost of the actual count exceeds the amount in
the account control: |
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Debit: |
Recharge operation inventory |
0-12XXX-15XX |
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Credit: |
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Recharge operation cost of goods sold |
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2-XXXXX-099X |
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If the cost of the actual count is less than the amount
in the account control: |
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Debit: |
Recharge operation cost of goods sold |
2-XXXXX-099X |
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Credit: |
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Recharge operation inventory |
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0-12XXX-15XX |
Alternative methods for recording inventory are available. They should
be discussed with the Comptroller's Office Manager of Current Unrestricted
Funds before implementing.
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