Adjust letter in the Supply Inventory

Aug 6th, 2022
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How to adjust letter in the Supply Inventory

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hello my friends this is eduard in todays video im going to explain to you how to improve and optimize your inventory quickly this is one of the challenge of my life to find a balance between inventory and service and you know that inventory is important for the service but its also a huge impact on your cash flow and under the profitability of your company and most of the time or we have too much inventory or we dont have enough and we have this kind of yo-yo effect every year every month and thats kind of exhausting we feel like were working like firefighters no one is really happy in the company and outside the company our customers are always complaining because there is not enough maybe the marketing department is also complaining your boss is coming to your office and say look edward we have too much said what what what is your action plan for tomorrow to make sure that we finally find this balance point so in this video im gonna give you solutions to really start optimizi

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Here are a few simple steps you can follow to make an inventory adjustment: Gather information. Determine the amount of the companys beginning inventory for the period youre calculating. Calculate the cost of goods sold. Evaluate inventory. Accurate inventory. Understated inventory. Overstated inventory.
If there is an overstatement of inventory, increase COGS by the dollar amount, which produces a lower net income. On the balance sheet reduce the ending inventory to reflect lower-ending inventory, and decrease retained earnings by the dollar change to net income.
An inventory adjustment transaction records the change in quantity and resulting value of inventory items within a location. For example, this transaction can be used to account for clerical errors, changes in cost, thefts, or miscounts.
This is performed by the following two adjusting entries: Debit the beginning inventory balance to Income Summary, and credit the Merchandise Inventory account. Debit the ending inventory balance to Merchandise Inventory, and credit the Income Summary account.
The first adjusting entry clears the inventory accounts beginning balance by debiting income summary and crediting inventory for an amount equal to the beginning inventory balance. The second adjusting entry debits inventory and credits income summary for the value of inventory at the end of the accounting period.
Under the perpetual inventory method, we compare the physical inventory count value to the unadjusted trial balance amount for inventory. If there is a difference (there almost always is for a variety of reasons including theft, damage, waste, or error), an adjusting entry must be made.
Inventory adjustments are corrections of inventory or stock records to bring them into agreement with the findings of the actual physical inventory.

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