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Cherno Co manufactures clothing and has opening inventory of $8.6m at 1 January 20X5 An error has been discovered whereby $0.8m of inventory which was sold in December 20X4, was incorrectly included in opening inventory at 1 January 20X5. The sale was correctly recorded in the year ended 31 December 20X4. The inventory of Cherno Co was counted at 31 December 20X5 and amounted to $6.9m. This closing inventory at 31 December has not yet been accounted for in Cherno Co’s trial balance. The following two issues were identified during the inventory count at 31 December 20X5 and have not yet been accounted for:
(1) 20,000 shirts were found to be damaged. These are included in inventory at a cost of $12 per shirt. After repair costs of $4 each, Cherno Co will sell the shirts at the normal selling price of $15 per shirt.
(2) 50,000 jackets were incorrectly deemed to have been sold in December 20X5 and therefore excluded from the inventory count at 31 December 20X5. However, these were actually not delivered to the customer until January 20X6. The jackets had cost Cherno Co $19.20 each to produce and were sold for $24 each. What is the closing inventory as at dec 2005