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How is closing inventory incorporated in the financial statements?
A DEBIT: statement of profit or loss CREDIT: statement of financial position
B DEBIT: statement of financial position CREDIT: statement of profit or loss
I don’t understand the question.Could you solve this question , please…Thank you.The answer is B, because it is an asset in the SOFP and therefore a debit.
(I can understand you not knowing the answer, but I am surprised that you do not understand the question, assuming that you have studied inventory.)I really do suggest that you watch our free lectures on inventory because this is explained with several examples.
Our free lectures are a complete course for Paper F3 and cover everything needed to be able to pass the exam well.
Sir, please help me with the answer to the following question on inventory.
The inventory value for the financial statements gggg for the year ended 30/06/03 was based on an inventory count on 7 July 2003 which gave a total inventory value of 950,000.
Between 30 June and julyjuly 2006the following transactions took place
Purchases of goods 11,750.00
Sales (mark up on cost at 15%) 14,950.
Goods returned by global inc to supplier 1500
What figure should be included in the financial statements for inventories at 30 June 2003?Thank you
You need to work backwards from the value at 7 July to find out what it was on 30 June.
So you need to subtract any purchases since 30 June, add back any sales since 30 June (at cost obviously), and add back any returns to suppliers since 30 June.
Presumably anyway you have an answer in the same book in which you found the question?
Hello sir, kindly help me with this question
For Morgan plc the direct production cost of each unit of inventory is 46. Production overheads are 15 per unit. Currently the goods can only be sold if they are modified at a cost of 17 per unit. The selling price of each modified unit is 80 and selling costs are estimated at 10% of selling price. At what value should each unmodified unit of inventory be included in the statement of financial position?
The answer given was 55. I knew I must value inventory at its lowest cost, but the question stated was the value of each unmodified unit of inventory. Shouldn’t it be 61 ?We value at the lower of cost and net realisable value.
The cost of an unmodified unit is 46 + 15 = 61.
The net realisable value is 80 (selling price) less 8 (selling costs) less 17 (cost of modifying) = 55.
The lower of the two is 55 and so this is what they will be valued at.
I do suggest that you watch our free lectures on inventory. Our lectures are a complete course for Paper F3 and cover everything needed to be able to pass the exam well.
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