What account 2810 is for
Work in the workshop is finished, the product has been packed and delivered to the warehouse. From this moment it is no longer a "production cost" but a finished product waiting to be sold. Paragraph 136 of the Instructions to NAS No. 21 divides finished goods into three sub-accounts:
| Sub-account | Where the product is |
|---|---|
| 2810 "Finished goods in the warehouse" | In the organisation's warehouse |
| 2820 "Finished goods on display" | At an exhibition, fair, advertising event or demonstration |
| 2830 "Finished goods transferred under agency (commission) agreements" | Handed to an agent for sale |
2810 is the main one of these three: a product enters here first, and moves to 2820 or 2830 from 2810 (paras. 139 and 140).
An asset account: what that means
In the chart of accounts, group 2800 has type "A" (asset). Under paragraph 3, increases in an asset account are recorded on the debit side and decreases on the credit side, and the balance is a debit balance. So the debit balance of 2810 shows the cost of the products now in the warehouse that have not yet been sold.
At what value it is recorded
Under paragraph 138, products in 2810 are carried at actual production cost. The same paragraph covers three special cases:
- Agriculture. Crop, livestock and processed products are carried during the year at the forecast cost from the business plan; at the end of the year the difference from actual cost is calculated and adjusted in the share relating to the year-end balance.
- A property built for sale. The cost of a construction project intended for sale is also carried in 2810.
- Accounting price. In analytical accounting, products may be carried at an accounting price (planned cost, selling price and so on), with the difference from actual cost shown separately. The calculation for allocating the difference to products sold is set out in detail in a separate article on the site (see "See also" below).
What does not go into 2810
Under paragraph 137, services rendered and work performed for outside parties are not finished goods and are not recorded in group 2800: their actual costs are transferred directly from the cost accounts to 9130 "Cost of work performed and services rendered". Products handed over to the customer on site whose acceptance certificate has not yet been drawn up also do not go to 2810 but remain in work in progress.
What goes to the debit side
Ways in from the table in paragraph 141: receipt from the primary workshop, auxiliary workshop or service facility, receipt under the semi-finished product method (from 2110), products returned from an exhibition, products received from a separate division, surplus products found in a stock-take, and an increase in value on revaluation.
What goes to the credit side
The main way out is a sale: the cost of products shipped to a customer goes from the credit of 2810 to the debit of 9110 "Cost of finished products sold" (para. 138). The other ways out in the table in paragraph 141: use for the organisation's own needs or return to the workshop for reprocessing, issue for rectifying defective products, use for work included in deferred expenses, issue to an exhibition, transfer to a separate division, transfer as a financial investment, transfer free of charge, a decrease in value on revaluation, and a shortage found in a stock-take (with and without a person at fault).
Points to watch
- Is anyone at fault for a shortage. A shortage with no person at fault identified is recorded as Dr 5910 Cr 2810 (para. 141, row 8), and a shortage caused by the materially responsible person as Dr 4730 Cr 2810 (para. 141, row 13). So the stock-take documents must state clearly who, if anyone, is at fault.
- Revenue is not here. 2810 shows cost only. The selling price and revenue are recorded separately in 9010 "Revenue from sale of finished products"; only the cost goes from 2810 to 9110.
- Analytical accounting. Under paragraph 140, analytical accounting for 2810, 2820 and 2830 is kept by responsible person, by type of product (grade, batch) and by storage location. In an organisation making several products, keeping a separate card for each type follows from this requirement.
- Products sent to an exhibition are not sold (practical tip). A product moved to 2820 still belongs to the organisation; do not record it in 9110 as a sale. If it is sold at the exhibition, the same entries are made as for 2810 (para. 139).
Main journal entries 12
Debit and credit are as in the model table of Appendix 2 to NAS No. 21. The transaction text briefly restates the table row.
| Transaction | Debit | Credit | Source |
|---|---|---|---|
| Finished goods received into the warehouse from the primary or auxiliary workshop or a service facility | 2810 | 2010, 2310, 2710 | NAS No. 21, para. 141, row 1 |
| Finished goods received under the semi-finished product method of accounting | 2810 | 2110 | NAS No. 21, para. 141, row 2 |
| Finished goods received from a separate division | 2810 | 6110 | NAS No. 21, para. 141, row 14 |
| Surplus finished goods found in a stock-take | 2810 | 9390 | NAS No. 21, para. 141, row 5 |
| Cost of finished goods sold written off | 9110 | 2810–2830 | NAS No. 21, para. 141, row 11 |
| Finished goods used for the organisation's own needs or returned to the workshop for reprocessing | 2010, 2310, 2510, 2710, 9410–9430 | 2810 | NAS No. 21, para. 141, row 6 |
| Finished goods from the warehouse issued for rectifying defective products | 2610 | 2810 | NAS No. 21, para. 141, row 7 |
| Finished goods sent to an exhibition | 2820 | 2810 | NAS No. 21, para. 141, row 10 |
| Finished goods transferred to a separate division | 4110 | 2810–2830 | NAS No. 21, para. 141, row 15 |
| Finished goods transferred free of charge | 9430 | 2810 | NAS No. 21, para. 141, row 16 |
| A shortage found in a stock-take, no person at fault identified | 5910 | 2810 | NAS No. 21, para. 141, row 8 |
| A shortage caused by the materially responsible person found in a stock-take | 4730 | 2810 | NAS No. 21, para. 141, row 13 |
Example
"Chortoq konserva" LLC (a fictional company) started the season with an empty warehouse and made two different products during the month. Analytical accounting is kept separately for each type of product (para. 140). Actual production cost: tomato paste 9,000 soums per jar, apple jam 11,000 soums per jar.
| No. | Transaction | Dr | Cr | Quantity, jars | Amount, soums | Basis (NAS No. 21, para. 141) |
|---|---|---|---|---|---|---|
| 1 | Tomato paste received from the primary workshop | 2810 | 2010 | 6,000 | 54,000,000 | row 1 |
| 2 | Apple jam received from the primary workshop | 2810 | 2010 | 1,500 | 16,500,000 | row 1 |
| 3 | Paste sold to customers (cost) | 9110 | 2810 | 4,500 | 40,500,000 | row 11 |
| 4 | Jam sold to customers (cost) | 9110 | 2810 | 1,000 | 11,000,000 | row 11 |
| 5 | Paste shipped to the separate division in the region | 4110 | 2810 | 800 | 7,200,000 | row 15 |
| 6 | Jam given free of charge to a children's home | 9430 | 2810 | 100 | 1,100,000 | row 16 |
| 7 | Paste with damaged lids returned to the workshop for repacking | 2010 | 2810 | 60 | 540,000 | row 6 |
| 8 | Stock-take: paste short, no person at fault identified | 5910 | 2810 | 20 | 180,000 | row 8 |
| 9 | Stock-take: jam surplus | 2810 | 9390 | 10 | 110,000 | row 5 |
In transaction 9 the surplus jam was valued, as an assumption, at cost (11,000 soums per jar). The selling price and revenue in transactions 3 and 4 are recorded separately in 9010, and the tax consequences of transaction 6 are not included in this example.
Month-end balance by type of product:
| Product | In, jars | Out, jars | Balance, jars | Balance, soums |
|---|---|---|---|---|
| Tomato paste | 6,000 | 5,380 | 620 | 5,580,000 |
| Apple jam | 1,510 | 1,100 | 410 | 4,510,000 |
| Total 2810 | 10,090,000 |
Amount check for 2810:
| Item | Amount, soums |
|---|---|
| Opening balance | 0 |
| Debit turnover (1, 2, 9) | 70,610,000 |
| Credit turnover (3–8) | 60,520,000 |
| Closing balance | 10,090,000 |
Check: 70,610,000 − 60,520,000 = 10,090,000 soums, which equals the sum of the balances by type (5,580,000 + 4,510,000). If the two results differ, some transaction was recorded against one type but issued on another type's card: compare the quantities first, then the amounts (practical tip; example prepared by the author).