Prove ownership and cutoff before pricing the count

Cedar Trail's count sheet says 70 units. Five are supplier-owned samples in its warehouse, 12 Cedar Trail units sit with a consignee, and 8 are on a truck. A buyer says “use the invoice date.” A warehouse manager says “count what we can touch.” Neither rule answers the balance-sheet question.

Build two ledgers, then reconcile them

The location ledger starts with physical counts by site, custodian, SKU, and condition. The rights ledger starts with the entity's contracts and asks who owns each unit at December 31. Link them with:

• executed purchase, sale, consignment, return, and side agreements;
• shipping terms interpreted in the contract's context;
• carrier acceptance, bill of lading, delivery, and insurance evidence;
• receiving reports and shipment logs before and after year-end;
• vendor invoices, customer invoices, payables, receivables, and cash only as corroborating records; and
• consignee reports, customer sales, returns, commissions, and settlement.

Begin with counted units. Remove goods held for suppliers and consignors. Add owned goods at consignees, third-party warehouses, processors, or in transit. The result is the population handed to costing.

Do not let shorthand replace transfer evidence

Shipping labels such as “shipping point” or “destination” can direct research, but the executed terms and actual event sequence matter. Identify the exact goods, parties, obligation, transfer condition, carrier event, delivery event, loss or redirection rights, date, and related records. Then align both sides of the transaction. The buyer's inventory and payable must use the same supported date. So must the seller's revenue and cost transfer.

Treat consignment as a role problem

The consignee's possession does not by itself create a purchase. The consignor's delivery does not by itself create a sale. Reconcile each unit from consignor shipment through consignee location, customer sale or return, commission, and settlement. Remove supplier-owned consigned goods from Cedar Trail's count; add Cedar Trail's unsold units held by others.

Release test

Prepare one row for every count-to-rights adjustment. Include quantity, unit, location, counterparty, agreement, transfer condition, movement evidence, conclusion, related account, evidence owner, reviewer, and open fact. Withhold the population from costing if any material row has no supported rights date.

The Cedar Trail example shows a complete, checkable reconciliation. Then prepare the independent Northstar rights ledger without copying Cedar Trail's quantities or transfer conditions.