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Ita


Newbie

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Hello Everbody!
I'm working for a small window contracting company that does not have an inventory. They pick up their windows from suppliers and deliver them to customers. I record every purchase through a purchasing account. It happens that the company made a mistake on one of their orders and now they have to re-order windows for their client and keep the wrong ones in their garage/shop. In other words, the company got losses b/c of mistake they made. What will be the right treatment for the wrong order? Should I record the wrong order through a purchasing account or through inventory, as the company is keeping the wrong windows (and probably will sell them out)? How can I record losses at this point? I am relatively new in bookkeeping; and I would highly appreciate your help.

Ita 


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Shamus


Forum Moderator & Expert

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Hi Ita,

it's not a realised loss.

The company may not have held inventory up until now but now they are.

Record under purchases. If they haven't sold the windows by year end then the items are stock which is an asset, not a liability.

I think that I've answered your query but if I've misunderstood the question let me know and I'll have another bash.

kind regards,

Shaun.

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Shaun

Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
lor


Guru

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I would agree to record as a purchase too. Then at year end it would become stock like shamus has said.

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