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A retailer has the following purchases and sales of a particular product line.
Units purchasedPurchase price/unit Units sold Selling price/unit
$ $
2-December 100 500 60 530
16-December 60 503 80 528
30-December 70 506 50 526
14-January 50 509 70 524
28-January 80 512 50 522
11-February 40 515 40 520((At 31 December, the physical inventory was 150 units. The cost of inventories is
determined on a FIFO basis. Selling and distribution costs amount to 5% of selling price
and general administration expenses amount to 7% of selling price.)) – My question is what does this text have to do with finding the cost,NRV ? But i know the physical inventory means opening inventory. Should i just ignore the selling and distribution and general administration expenses?Inventory must always be valued at the lower of cost and net realisable value. So when you have found the cost using FIFO you need to check whether this or the NRV is lower.
Both topics are explained in my free lectures on inventory. The lectures are a complete free course for Paper F3 and cover everything needed to be able to pass the exam well.
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