Inventories written off & written down ( please explain)

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  • Avatar of tariqkath
    tariqkath
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    • Topics: 29
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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.


    Avatar of tabsom
    tabsom
    Participant
    • Topics: 16
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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


    Avatar of tariqkath
    tariqkath
    Participant
    • Topics: 29
    • Replies: 45

    @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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