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I at a California S Corp. due to an ERP glitch a large

amount of consignment inventory was...
I at a California S Corp. due to an ERP glitch a large amount of consignment inventory was not recording in our GL. How would I record this inventory now? How will it affect taxes?
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Answered in 46 minutes by:
11/16/2017
taxmanrog
taxmanrog, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 1,140
Experience: Licensed CPA, MA, MST with 31 years' experience. Teach Accounting and Tax courses at Masters level.
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Customer reply replied 8 months ago
Okay

Is the consignment inventory your inventory that was at outside locations? Or is it other people's inventory that was in your locations to sell?

If it is the first case, your inventory that is out at other locations, then you can either manually add the inventory to your books to get the current year tax return correct, or if you do not, then you can just fix it this year. The nice thing about inventory is that if it is understated in one year, it is overstated in the second year. Over the two year period it comes out even. It is just a timing difference.

If it is the second case, where outside people have inventory in your stores, this inventory should NOT be included in your inventory. Consigned inventory belong on the books of the person who actually owns (consigns) the inventory. Not on the books of the company that is trying to sell it. The inventory belongs on the books of the person who holds the title and ownership of the inventory.

I hope this answers your question. IF you have any more, please feel free to ask and I will be happy to answer.

Thanks! Have a great week!

Roger

taxmanrog
taxmanrog, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 1,140
Experience: Licensed CPA, MA, MST with 31 years' experience. Teach Accounting and Tax courses at Masters level.
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Customer reply replied 8 months ago
The inventory is ours and is at customer locations to be billed as they use it. How do we record it.

It was nice talking to you! Please let me know if your trial balance balances or not.

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