inventory IAS 2

The inventory was valued at 950,000 on 7 July, and we have to work backwards to find out what the inventory was on 30 June. The purchases had not been bought as at 30 June and so they need subtracting from the inventory at 7 July. The sales had not been made as at 30 June, and so the cost of them need adding to the inventory at 7 July. The returns to the supplier had not been returned at 30 June and so were still in inventory at 30 June and therefore need adding.

Peter Jackson is a sole trader who has recently prepared his accounts for the year ended 31 May 20X2. Peter also prepared some ratios and statistics in order to analyse those accounts. Unfortunately Peter has now mislaid the accounts and all that is remaining is the schedule of ratios. Gross profit mark-up on cost 50% Net profit/capital employed 30% Net profit margin 10% of revenue Opening inventory at selling price 73 days, based on revenue Closing inventory at selling price 109.5 days, based on revenue Current assets: current liabilities 2.9:1 Receivables payment period 45 days Payables payment period 60 days Peter can remember that his revenue for the year totalled $300,000. Required: Prepare Peter’s statement of profit or loss for the year ended 31 May 20X2 and his statement of financial position at that date in as much detail as is possible from the above information. (15 m

I tried attempting this question but it was to complicated. This is a question from the Kaplan question book. Please help me answer this question Mr. Maffot. Thanks

In future you must start a new thread when you are asking about a different topic. Your question is nothing to do with the valuation of inventory! Also, you must have an answer in the same book in which you found the question, so although I will start you off you must not expect me to provide a full answer. You must ask about whatever it is in the printed answer that you are not clear about. To start you off, we know that the revenue is $300,000. The gross profit is 50% of cost and is therefore 50/150 x 300,000 = $100,000 (and the cost of goods sold is therefore $200,000). The net profit is 10% of revenue and is therefore 10% x $300,000 = $30,000. The receivables payment period is 45 days, and therefore the receivables are 45/365 x $300,000 = $36,986 (assuming there are 365 days in a year, but I expect that the question actually said to assume 360 days in a year!) I assume that you have watched my free lectures on this and therefore remember all the ratios?

Thank you Mr. John. I did watch your lecture and i understand now. I did open a new topic for this question but it wasn't getting submitted. I tried several times until i posted the question here. Sorry about that.

I also have another question Mr. John. This is from a mock exam and i do not have the answer. On 1 November 20X9 Christophe had 400 units of opening inventory with a cost of $2,400. The following transactions occured during the month: 8 November Sales 100 units at $8.50 per unit 19 November Purchases 300 units at $6.45 per unit 24 November Sales 400 units at $8.75 per unit Using the first-in first-out (FIFO) method of inventory valuation what should the closing carrying amount of inventory be at 30 November 20X9?

You should not be attempting questions for which you do not have an answer. You should be using a Revision Kit from one of the ACCA Approved Publishers - they have answers and explanations. There are 200 units in inventory as at 30 November. On a FIFO basis they will be from the 300 that were purchased on 19 November and will therefore be valued at $6.45 per unit. Please do watch my free lectures on the valuation of inventory.