Adjusting Materials Ledger Cards and Accounts to Conform to Inventory Accounts - Inventory Valuation:

When the inventory count differs from the balance on the materials ledger card, the ledger card is adjusted to conform to the actual count.

if the ledger card balance shows more materials units than the inventory card, and entry is made in the issued section; and the balance section is reduced to equal the verified account. In case the materials ledger card balance is less than the physical count, the quantity differences may be entered in the received section or may be entered in red in the issued section with the balance section being increased to agree with the actual count.

In addition to the correction on the materials ledger card, the materials account must be adjusted for the increase or decrease. If the inventory count is less than that shown on the materials ledger card, the following journal entry should be recorded:

You may also be interested in other useful articles from "controlling and costing materials" chapter:

1. Purchases of productive material
2. Purchases of supplies, services, and repairs
3. Materials purchasing forms
4. Receiving materials
5. Invoice approval and data processing
6. Correcting invoices
7. Electronic data processing (EDP)  for materials received and issued
8. Cost of acquiring materials
9. Storage and use of materials
10. Issuing and costing materials into production
11. Materials ledger card - perpetual inventory
12. First-in-First-Out (FIFO) Costing Method
13. Average Costing Method
14. Last-in-First-Out (LIFO) Costing Method
15. Other Methods-Month end average cost, last purchase price or market price at date of issue, and standard cost
16. Inventory valuation at cost or market whichever is lower
17. American Institute of Certified Public Accountant (AICPA) cost or market rules
18. Adjustments for departures from the costing method used
19. Inventory pricing and interim financial reporting
20. Transfer of materials cost to finished production
21. Physical inventory
22. Adjusting Materials Ledger Cards and Accounts to Conform to Inventory Accounts
23. Scrap and waste
24. Spoiled goods
25. Defective work
26. Discussion Questions and Answers about Controlling and Costing Materials

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