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Experienced Member

Value inventory fuel on hand at 12/31

At the end of 2018, I had to value inventory on hand and do a journal entry for our gasoline and diesel. Our company will do a JE that debits the asset purchases account for that value and credits COGS for that value.

My question is that I know the amount of diesel and gasoline in gallons on hand at 12/31/18. But I need to get that amount into a dollar amount. They gave me two invoices that show different costs for the fuel purchased. Which dollar amount should I use? Also, the total invoice for diesel states (example) $4,000 but $4,000 is not only the cost of the diesel but comprises all of the taxes and freight associated with the diesel. Does that entire number get put into the entry or do I only use the gallons x cost of actual diesel?

Thank you for your assistance and guidance! 

2 Comments
Established Community Backer ***

Re: Value inventory fuel on hand at 12/31


@KateH wrote:

At the end of 2018, I had to value inventory on hand and do a journal entry for our gasoline and diesel. Our company will do a JE that debits the asset purchases account for that value and credits COGS for that value.

 

As long as you are NOT using inventory items for this, that is fine, it means you are taking value out of COGS the way you show it.

 

Based on the account name, asset purchases, the journal entry should be the other way around

debit cogs, credit asset purchases to post the value of the fuel used

 

My question is that I know the amount of diesel and gasoline in gallons on hand at 12/31/18. But I need to get that amount into a dollar amount. They gave me two invoices that show different costs for the fuel purchased. Which dollar amount should I use? Also, the total invoice for diesel states (example) $4,000 but $4,000 is not only the cost of the diesel but comprises all of the taxes and freight associated with the diesel. Does that entire number get put into the entry or do I only use the gallons x cost of actual diesel?

Thank you for your assistance and guidance! 

 

Use the average cost, total cost / number of gallons purchased.  then average cost * qty on hand to get closing value. Yes all costs to get the fuel are part of that, shipping tax etc etc


 

Experienced Member

Re: Value inventory fuel on hand at 12/31

Thank you, I will definitely do that for my gasoline entry.

 

I forgot to mention, they could not get me the diesel on hand at 12/31 because the meter reading part was broken. Can I take the diesel inventory number that was purchased in December, subtract the amount of diesel sold and get a number for my 12/31 diesel entry?