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Hi, my teacher.
I got the question following behind:‘The inventory value for the financial statements for the year ended 30 June 20X3 was based on a inventory count on 7 July 20X3, which gave a total inventory value of $950,000
Between 30 June and 7 July 20X6, the following transactions took place.
Purchase $11,750
Sales of goods (mark up on cost at 15%) $14,950
Goods returned to supplier $1500What the figure should be included in the financial statements for inventories at 30 June 20X3?
Teacher, please have me know that the total inventory value of $950,000 is the opening inventory on 7 July 20X3?
I don’t understand what the figure should be included in financial statement for inventory at 30 June 20X3?
Why the author ask for the year of 20X3 instead of 20X6 such as the information above?First, I don’t know where you found this question but there is obviously a typing error.
It should say that the inventory count was on 7 July 20X3 (not 20X6).
In order to prepare the statements at 30 June 20X3 they need to know what the inventory was. However, what has happened (and what often happens in real life) is that for some reason they were not able to count the inventory on 30 June, so they counted it on 7 July but then need to work backwards to find out what the inventory was on 30 June. So, for example, they need to subtract any purchases that took place during the period and add back any sales that took place.
Hope that helps 🙂
Hi, there. Now, i understand your instruction, but i dont know how to state that on statement of profit or loss?
I did as you said: 950,000 -11,750 + 13000(14,950×100/115) + 1500 = 952,750Once again, could you please write clearly the answer is? I am still a bit confused about that…hix
Your answer is correct, and that is all the question asked for.
As at 30 June X3, the correct inventory figure will appear on the Statement of financial position and as a reduction from the cost of sales on the Statement of profit or loss.
The double entry is exactly as normal (and covered in the free lecture on inventories).
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