Cover Image
close this bookBasic Accounting for Credit and Savings Schemes (Oxfam, 1996, 96 p.)
close this folderChapter 9: Stock
View the document(introduction...)
View the documentSecurity
View the documentRecord keeping
View the documentStock cards
View the documentStock received
View the documentStock issued
View the documentItems issued on credit
View the documentChecking the stock
View the documentThe value of the stock

The value of the stock

We have seen that stock is recorded in the accounting records at average cost. For example, the value of the 94 ploughs in stock at 30 November (from figure 60) is 9,603. This is made up of:

78 ploughs purchased for 7,880 including transport

7,880

22 ploughs purchased for 2,335 including transport

2,335

Less: 6 ploughs issued at 102 each

(612)

Value of ploughs held at 30 November 19XX

9,603

The average cost of each plough is 9,603 . 94 = 102. The ploughs are currently being sold for 115 each. However, the stock take (figure 62) has revealed that 4 of the ploughs are broken. It is likely that the broken ploughs are now worth less than the average cost of 102 each. The accounting records should be adjusted to reflect this.

If we assume that the broken ploughs are now worth nothing, we can update the stock card as follows:

Stock Card: ploughs

Date

Details Issued to/ received from

Movement

Cost Balance

Quantity Movement

Balance

2.11

Purchase

8,000

8,000

80

80

3.11

Transport

80

8,080

-

80

4.11

Return 2 ploughs

(200)

7,880

(2)

78

25.11

Purchase

2,310

10,190

22

100

26.11

Transport

25

10,215

-

100

28.11

To Village X

(204)

10,011

(2)

98

28.11

To Village Y

(306)

9,705

(3)

95

30.11

To Village Z

(102)

9,603

(1)

94

30.11

Write off of

(408)1

9,195

(4)

90


damaged stock





NOTE: 1 Cost of 4 ploughs written-off: (9,603 . 94) x 4 = 408. This amount will appear as an
expense in the Balance Sheet (see figure 65).

Figure 64: Animal traction project: stock card, showing write-off of damaged stock

Balance sheet at 30 November 19XX - Amended

Notes

Cash


65

Stock

1

11,645

Debtors

2

460



12.170

Grant received


14,000

Deficit

3




(1.830)



12.170

Notes:
1 Stock
Ploughs9,195

Tins of bean seeds: 2.450
Total: 11.645

2 Debtors: see loan register.
3 Deficit

Sales (from stock issue book)

1,340

Cost of stock sold

(1.112)

Gross profit

228

Administration expenses

(1,600)

Stock write-offs (50 + 408)

(458)

Deficit

(1.830)

Figure 65: Animal traction project: amended balance sheet, showing stock write-offs

A summary of this chapter
1 The management committee should appoint a storekeeper to be

responsible for the record keeping and security of the stock. 2 The storekeeper should keep the following records:

· a stock card for each type of stock;
· a stock issue book to record all stock going out;
· a loan register to record items issued on credit and repayments received.

3 From time to time the management committee should check the stock

system by carrying out a stocktake.