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Inventory Adjustment Debit/Credit Memos
Inventory Adjustment Debit/Credit Memos
The journal entries generated for these transactions are dependent upon the Adjustment Code specified. Each adjustment code is defined as either increasing, decreasing, or not affecting inventory.
1. Adjustment defined as increase in inventory
|
1
|
unit adjusted
|
|
10.0000000
|
accounting cost per unit
|
|
DR
|
Inventory
|
10.00
|
|
|
CR (User-defined gain account)
|
10.00
|
2. Adjustment defined as decrease in inventory
|
1
|
unit adjusted
|
|
10.0000000
|
accounting cost per unit
|
|
DR
|
(User-defined expense account)
|
10.00
|
|
|
CR Inventory
|
10.00
|
3. Adjustment neither increases nor decreases inventory - no journal entries generated
Note: A credit memo may represent a transaction in which unacceptable goods have been returned from a customer and are being scrapped. In this situation, two transactions should be entered -- one to record the return of goods from the customer into inventory, and one to record the scrapping of the inventory.