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How should a beauty supply store document damaged or missing inventory?

Short answer

Investigate and document the difference before adjusting the books. Record the items, quantities, costs, dates and reason for the adjustment. The tax treatment depends on the inventory method and facts.

Example

A store removes damaged products from sale. Keep a list and supporting records rather than writing off an estimated retail selling price.

What to review

Physical counts, purchase invoices, returns, disposal records and inventory adjustments. Avoid counting the same cost twice.

Official source: www.irs.gov/publications/p334

Related service: Retail Beauty Supply Accounting

This answer is general information, not advice for your specific situation. Tax rules change, so please contact us to review your facts before acting.

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