inventory

The closing inventory at cost of a company at 31 January 20X3 amounted to $284,700.
The following items were included at cost in the total:
1 400 coats, which had cost $80 each and normally sold for $150 each. Owing to a defect in
manufacture, they were all sold after the reporting date at 50% of their normal price. Selling
expenses amounted to 5% of the proceeds.
2 800 skirts, which had cost $20 each. These too were found to be defective. Remedial work in
February 20X3 cost $5 per skirt, and selling expenses for the batch totalled $800. They were
sold for $28 each.

ANSWER :A
-Original value $284,700
-Coats – Cost 400 ? $80 (32,000)
– NRV ($75 ? 95%) X 400 28,500
-total 281,200
At 31 January 20X3 the skirts were correctly valued at costs incurred to date of $20 per skirt
which was lower than the NRV of $22. Therefore no adjustment required.

Sir we get the figure that is lower of cost and net realisable value. how come skirts do not need and adjustment when they where sold for $28 instead of $20. NRV=($28-$5-$1)=$22