ACCOUNTING REFERENCE WHEN INVENTORY OF ASSETS/INVENTORIES IS OVER OR UNDER

1. How to account when inventory is Over:

a) Accountants record the value of over assets according to their fair value at the time of discovery for recording in the accounting books, the following accounts shall be recorded:
Debit Accounts 111, 152, 153, 156, 211 (According to fair value)
___ Credit Account 338 – Other payables (3381)

b) When there is a written record of handling by the competent authority on the over assets, the accountants, based on the handling decision, shall record in the relevant accounts, the following accounts shall be recorded:

Debit Account 338 – Other payables (3381)
___ Credit Account 411 – Owner’s investment capital; or
___ Credit Account 441 – Capital for capital construction investment (If according to Circular 200);
___ Credit Account 338 – Other payables (3388);
___ Credit Account 642 – Enterprise Cost Management
___ Credit Account 711 – Other income.

2. How to account when inventory is Under:

a) When the cause is unknown, pending handling, the following accounts shall be recorded:
Debit Account 138 – Other receivables (1381)
___ Credit Accounts 111, 152, 153, 155, 156.

b) When there is a record of handling by a competent authority with respect to the under assets, the following accounts shall be recorded based on the handling decision:
Debit Account 111 –Cash (individuals, organizations pay compensation)
Debit Account 1388 – Other receivables (individuals, organizations must pay compensation)
Debit Account 334 – Payable to employees (compensation amount deducted from salary)
Debit Account 632 – Cost of goods sold (value of loss and loss of inventory after deducting compensation according to the decision on handling)
Debit Account 811 – Other expenses (remaining value of the missing fixed assets through inventory must be included in the enterprise’s loss)
___ Credit account 1381 – Pending under assets.