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General Accounting Discussions: food inventory disposals restaurant

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  1.  
    • CommentAuthorlpbss
    • CommentTimeMay 27th 2007
     
    In cash basis accounting, how do I account for food products that have to be disposed of because they were not used or sold before they became unusable?
    • CommentAuthorlpbss
    • CommentTimeMay 27th 2007 edited
     
    Think I have answered my own question. In cash basis accounting the difference between the cost of the food items purchased and the income earned by the sale of those food items automatically reflects the amount of food items that were not sold.
    Example
    You had to throw away $25.00 of food purchased for sale
    Sales $ 275.00
    Purchases $ (150.00)
    Net profit $ 125.00

    Example:
    You sold everything you bought
    Sales $300.00
    Purchases $(150.00)
    Net Profit $150.00

    duh!

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