# Inventories written off & written down ( please explain)

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This topic contains 2 replies, has 2 voices, and was last updated by  tariqkath 2 years, 8 months ago.

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• tariqkath
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Lucas wagg, trading as fairlock fashions, ends his fianacial year on 31st march. At 1 April 2005 he had goods in inventory valued at \$8,800. During the year to 31 March 2006, he purchased goods costing \$48,000. Fashion goods which cost \$2,100 were still held in inventory at 31 March 2006, and Lucas wagg believes that these could only now be sold at a sale price of \$400. The goods still held in inventory at 31 March 2006 (including the fashion goods) had an original purchase cost of \$7,600. Sales for the year were \$81,400.

Calculate the gross profit of fairlock fashions for the year ended 31 March 2006.

tabsom
Participant
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learn the formula
sale ***
opening inventory ***
purchases ***
closing inventory (***)
cost of sale (***)
gross profit ****

sale 81400
opening inventory 8800
purchses 48000
closing inventory (5900)*
cOI (50900)
GP (81400-50900) 30500

*frst calculate NRV.ITS sale – cost
so (2100-400= 1700)
7600-1700= 5900

tariqkath
Participant
• Topics: 33
• Replies: 49

@tabsom said:
learn the formula
sale ***
opening inventory ***
purchases ***
closing inventory (***)
cost of sale (***)
gross profit ****

sale 81400
opening inventory 8800
purchses 48000
closing inventory (5900)*
cOI (50900)
GP (81400-50900) 30500

*frst calculate NRV.ITS sale – cost
so (2100-400= 1700)
7600-1700= 5900

Can you plese explain me the last part The calculation of closing inventory .

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