How do you deal with stock that is out of date

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How do you deal with stock that is out of date

Consultant Accounts
Published by Nigel in Support · 5 July 2016
Tags: outofdatestock
Q:How do you deal with stock that is out of date, or leaflet etc that are obsolete? do you just remove them from stock as a stock adjust on customer order? How do you account for it on the accounting spreadsheet?
Jeannette


A:Anything that goes out of date or obsolete needs ‘writing down’. Writing down being an accounting term to deal with the loss to the business.

To write something down in effect means noting the cost of the item. This will be the cost to purchase the item from head office. Once you have that cost you need to offset that cost against your profits.

One way to do this is in Orderbook is show it as a negative sale. I use a negative sale rather than a return as it will also remove the items from stock.

So add the items to be written down as a Customer Order. Add a note in the ‘Reason for Refund’ so you know why you have done this. (OOD – out of date?) Select ‘Y’ in the options for OWN USE to reduce the price, at your current discount band, to a cost price and process the ‘order’.

Once processed, go to the Customer Order history and add a negative sign in front of the value amount (you will have to press the large grey button to allow editing). Then go to the Month sheet and add a negative sign in front of the value amount there too.

You have now written down items against your business profits. It is good to know you will not be paying tax on items you are disposing of.

Hope this helps
N



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