Hi,
I'm hoping someone can help me understand what i need to do in valuing our stock. I have recently joined a company and put an accounting programme (Xero) in place that was previously just spreadsheets showing sales, purchases, receipts and payments and want everthing to be accurately recorded.
We produce Canvas Wall Art where we print an image on canvas and then stretch it around a wooden frame so it is ready to hang when delivered to a customer.
We make the frames ourselves with sheets of MDF. My question is, if i have say 10 sheets of MDF in stock at year end i will value this at cost. But i also have the equivalent of say 5 sheets that have been through part of the manufacturing process - Cut into strips and the edge of each strip routered. There is a labour cost involved in this process, and therefore the value of this MDF (now classed as Bars) has increased by the cost of labour to produce each one.
How do i show the raw material (MDF) cost increasing to show the new value of the WIP (Bars)? What would the double entry be? I'm not sure if i'm trying to make it more complicated than it has to be which i why i'm not coming up with an answer!
Any help would be appreciated.
Thanks
Replies (2)
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As with all stock, the double entry is to debit closing stock at valuation in the balance sheet, and to credit closing stock at valuation in the trading account.
Your question is about valuing it, which is nothing to do with double entry. Double entry is what you do with the valuation figure when you have calculated it.