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Help with this question please, having problems with what to add or subtract.
A company with an accounting date of 31 October carried out a physical check of inventory on 4 November 20X3, leading to an inventory value at cost at this date of $483,700
Between 1 November 20X3 and 4 November 20X3 the following transactions took place :
1. Goods costing $38,400 were received from suppliers
2. Goods that had a cost of $14,800 were sold for $20,000
3. A customer returned, in good condition , some goods which had been sold to him in October for $600 and which had a cost of $400
4. The company returned goods that had a cost of $1800 in October to the supplier, and received a credit note for them.
What figure should appear in the company’s financial statements at 31 October 20X3 for closing inventory, based on this information?
A $458,700
B $505,900
C $508,700
D $461,500
Sir,
thanks for giving me answer in receivable section first!!!
I have another question
Since I never came across a question in which inventory was to be valued at NRV, therefore I am a little confused in this question as how the value of NRV is lower than cost and how to calculate it …..Inventory at 1 November 2014 ………….. 350
Inventory at 31 October 2015 was valued at $275,000 based on its original cost. However, $45,000 of
this inventory has been in the warehouse for over two years and the directors have agreed to sell it in
November 2015 for a cash price of $20,000.Folisha:
I am not going to provide the answer because you must have an answer in the same book in which you found the question (if not you should be using a different book – one produced by one of the ACCA approved publishers)!
However, since the inventory value given is at the 4 November, you need to work backwards to find out what the inventory would have been on 31 October.
So… you need to remove any purchases during those 4 days; you need to add back any sales during those 4 days; you need to remove any returns from customers during those 4 days; and you need to add back any returns to suppliers during those 4 days.
Obviously all of those adjustments need to be at cost, since the inventory will be valued at cost.
Tayyabumer:
I do not understand why you have not ever come across a question in which inventory was to be valued at NRV! Have you not watched my free lectures? (and if you have not then why are you asking here? 🙂 )
If they have agreed that the selling price of 45,000 of the inventory is for sale at 20,000 then this part of the inventory should be valued at 20,000!
I really do suggest that you watch my free lectures on this.
Our free lectures are a complete course for Paper F3 and cover everything needed to be able to pass the exam well!
Thank you so much sir….. and yes i do have the answer i just didn’t understand how they got the answer there wasn’t much explanation , but i do now. thanks again……. 🙂
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