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Calculation Cost of sale

Forums › ACCA Forums › ACCA FA Financial Accounting Forums › Calculation Cost of sale

  • This topic has 3 replies, 2 voices, and was last updated 11 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • February 23, 2014 at 3:01 pm #159863
    gabbi08
    Member
    • Topics: 135
    • Replies: 181
    • ☆☆☆

    Hi

    I am working on multi-task question and I came across this information given for the preparation of the financial.

    The inventories at the close of business on 31 December 2009 were valued at cost of $ 19871.Include in this balance was an inventory line costing $4000 that, due to the change in legislation in now illegal. Clerc could rectify the items at a cost of $ 2,500 and plans to do so. The items usually retail to customer at $6000.

    Additional information given in the question.

    Opening inventory 17331
    Purchase 130562

    Working

    Opening inventory 17331
    Purchase 130562

    Less closing inventory
    (19871- (4000-3500) ( 19371)

    Cost of sale 128522

    Could you please explain to me how to get (4000-3500) figure?
    No problem at all about 4000 but I could not figure out 3500.

    Thanks a lot

    Gabbi

    February 23, 2014 at 3:57 pm #159870
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54718
    • ☆☆☆☆☆

    The inventory should be valued at the lower of cost and net realisable value.

    The net realisable value is the final selling price less any extra costs that there will be. In this case, the NRV is 6000 – 2500 = 3500

    February 23, 2014 at 4:05 pm #159871
    gabbi08
    Member
    • Topics: 135
    • Replies: 181
    • ☆☆☆

    Hi John

    With the explanation everything makes more sense.
    Once again, thanks a lot

    Gabry

    February 23, 2014 at 4:25 pm #159872
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54718
    • ☆☆☆☆☆

    You are welcome 🙂

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    Posts
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