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At 30.09.2012 the closing inventory of a company was 386400 $.
The following items were included at cost:1. – 1000 items which had cost 18 $ each. They were all sold in October 2012 for 15 $ each, with selling expenses of 800 $.
2. – 5 items which had been in inventory from 1978. They were purchased with 100 $ each and sold in October 2012 with 1000 $ each, net of selling expenses.What was the figure for inventory to include in Balance Sheet at 30.09.2012?
Thank you,
camelia
Inventory should be valued at the lower of cost and net realisable value.
For item 1, the cost in total is 18,000. The net realisable value is 15,000 – 800 = 14,200.
Therefore they should be valued at the NRV. At the moment they are included in the total at the cost, and so the total needs reducing by 18,000 – 14,200 = 3,800.For item 2, the cost is $500, the net realisable value is 5,000. So they should be valued at cost. They are already included in the total at cost, which is fine, so no adjustment is needed for this.
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