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Suz9999 · Nov 11, 2010, 05:48 AM

the software package I work on calculates the variance between the system stock count and the phsical count entered. The journal either dr or cr the cost account and visa versa to the stock (asset) account.
I need to know why does the balance sheet (after posting ths journal) does not equal the physical stock count value.
We are in hospitality and therefor the stock is ordered/ held for re-sale or used in kitchen produciton and is sold as a manufactured product.

pready · Nov 11, 2010, 12:45 PM

After you do your physical count you need to do an adjusting entry to get your balance sheet account balance to equal your physical count dollar amount.

For example your supplies account balance is $100 but your actual physical count shows you actually have $60 worth of supplies on hand. You need to do an adjusting entry to bring your supplies account balance to $60
The adjusting entry will be:
Debit Supplies Expense for $40
Credit Supplies for $40

Now your supplies account balance equals your actual physical account balance of $60