9.10 stock cards for donations and drawings of stock
TRANSCRIPT
9.10
STOCK CARDS FOR
DONATIONS AND
DRAWINGS OF STOCK
© Michael Allison, Trinity Grammar School. Author’s permission required for external use
Chapter 7 showed that firm’s sometimes donate goods to charities
and community groups as a form of advertising.
E.g. A business donated 2 footballs to a local school. The Stock
Card for the footballs prior to the donation is as follows ...
What value should the 2 units donated be valued at?
$50?
$52?
$51?
9.10 STOCK CARDS FOR DONATIONS
AND DRAWINGS OF STOCK
Stock item: Product X IN OUT BALANCE
Date Reference Qty Cost Value Qty Cost Value Qty Cost Value
31 Aug Balance 4 50 200
20 52 1040
© Michael Allison, Trinity Grammar School. Author’s permission required for external use
Answer:
So in this case the 2 donated units wil l be valued at?.. .
This business has experienced an advertising expense of $100
Donations of stock = valued using First in First Out (FIFO)
Stock item: Product X IN OUT BALANCE
Date Reference Qty Cost Value Qty Cost Value Qty Cost Value
31 Aug Balance 4 50 200
20 52 1040
Stock item: Product X IN OUT BALANCE
Date Reference Qty Cost Value Qty Cost Value Qty Cost Value
31 Aug Balance 4 50 200
20 52 1040
31 Aug Memo 31 2 50 100 2 50 100
20 52 1040
9.10 STOCK CARDS FOR DONATIONS
AND DRAWINGS OF STOCK
© Michael Allison, Trinity Grammar School. Author’s permission required for external use
The General Journal entry required to record a $100 donation of stock…
Stock Control [A]
General Journal
Date ParticularsGeneral Ledger Subsidiary Ledger
Debit Credit Debit Credit
31 Jan Stock Control [A] 90
Stock Gain [R] 90
Stock gain of 3 hats at $30 each
(Memo 6)
Advertising [E]
General Journal
Date ParticularsGeneral Ledger Subsidiary Ledger
Debit Credit Debit Credit
31 Aug Advertising [E] 100
Stock Gain [R] 90
Stock gain of 3 hats at $30 each
(Memo 6)
General Journal
Date ParticularsGeneral Ledger Subsidiary Ledger
Debit Credit Debit Credit
31 Aug Advertising [E] 100
Stock Control [A] 100
Stock gain of 3 hats at $30 each
(Memo 6)
General Journal
Date ParticularsGeneral Ledger Subsidiary Ledger
Debit Credit Debit Credit
31 Aug Advertising [E] 100
Stock control [A] 100
Donation of 2 footballs at $50 each
(Memo 31)
Advertising [E]
31 Aug Stock control 100
Stock Control [A]
31 Aug Advertising 100
9.10 STOCK CARDS FOR DONATIONS
AND DRAWINGS OF STOCK
Narration:
• Type of unit (e.g. “footballs”)
• No. units lost (e.g. 2)
• Cost of units lost (e.g. $50)
• Memo #
© Michael Allison, Trinity Grammar School. Author’s permission required for external use
A business had the following Stock Card…
On March 2nd the owner withdrew one unit for personal use .
How should this be valued?
$10?
$8?
Stock item: Product X IN OUT BALANCE
Date Reference Qty Cost Value Qty Cost Value Qty Cost Value
1 Mar Balance 6 10 60
12 8 96
9.10 STOCK CARDS FOR DONATIONS
AND DRAWINGS OF STOCK
© Michael Allison, Trinity Grammar School. Author’s permission required for external use
Answer:
The withdrawal of 1 unit by the owner would be entered in the Stock
Card as follows:
Stock item: Product X IN OUT BALANCE
Date Reference Qty Cost Value Qty Cost Value Qty Cost Value
1 Mar Balance 6 10 60
12 8 96
Withdrawal of stock by owner = valued using First in First Out
(FIFO)
Stock item: Product X IN OUT BALANCE
Date Reference Qty Cost Value Qty Cost Value Qty Cost Value
1 Mar Balance 6 10 60
12 8 96
2 Mar Memo 5 1 10 10 5 10 50
12 8 96
9.10 STOCK CARDS FOR DONATIONS
AND DRAWINGS OF STOCK
© Michael Allison, Trinity Grammar School. Author’s permission required for external use
The General Journal entry required to record $10 drawings of stock…
Stock Control [A]
General Journal
Date ParticularsGeneral Ledger Subsidiary Ledger
Debit Credit Debit Credit
31 Jan Stock Control [A] 90
Stock Gain [R] 90
Stock gain of 3 hats at $30 each
(Memo 6)
Drawings [-OE]
General Journal
Date ParticularsGeneral Ledger Subsidiary Ledger
Debit Credit Debit Credit
31 Aug Drawings [-OE] 10
Stock gain of 3 hats at $30 each
(Memo 6)
General Journal
Date ParticularsGeneral Ledger Subsidiary Ledger
Debit Credit Debit Credit
31 Aug Drawings [-OE] 10
Stock control [A] 10
Stock gain of 3 hats at $30 each
(Memo 6)
General Journal
Date ParticularsGeneral Ledger Subsidiary Ledger
Debit Credit Debit Credit
31 Aug Drawings [-OE] 10
Stock control [A] 10
Withdrawal of 1 t-shirt at $10
(Memo 31)
Drawings [-OE]
31 Aug Stock control 10
Stock Control [A]
31 Aug Drawings 10
9.10 STOCK CARDS FOR DONATIONS
AND DRAWINGS OF STOCK
Narration:
• Type of unit (e.g. “t-shirt”)
• No. units lost (e.g. 1)
• Cost of units lost (e.g. $10)
• Memo #
© Michael Allison, Trinity Grammar School. Author’s permission required for external use
TASK
In-class Homework
SQ16 X
Ex9.12 part (a)
- Jul 17 to Jul 30 only X