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Accounting For Inventory Seminar QN

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17 views2 pages

Accounting For Inventory Seminar QN

Uploaded by

dmkinga617
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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ACC 188: PRINCIPLE OF FINANCIAL ACCOUNTING

ACCOUNTING FOR INVENTORIES SEMINAR QUESTIONS

1. Prepare brief notes for a company board meeting to answer the following points
for the directors:
a. Explain the term ‘inventories’ as defined by IAS 2, Inventories.
b. State which costs should be included when measuring the value of
inventories
c. State which costs should NOT be included when measuring the value of
inventories.

2. Beginning inventory was $26,000, ending inventory was $18,000, and cost of
goods sold was $94,000. What was the amount of inventory purchased?

3. On January 1, inventory was $37,000. Inventory purchases for the month of


January were $54,000 and the inventory balance on January 31 was $19,000.
What was the cost of goods sold?

4. Beginning inventory was $41,000, inventory purchased was $72,000, and cost of
goods sold was $100,000. What was the ending inventory?

5. The following information is taken form a perpetual inventory record. Calculate


the value of ending inventory and cost of sales for the period ending Aug 31,
using: (a) FIFO (b) LIFO (c) weighted average cost.
August 1: Beginning balance was 4 @$12
August 3: Sale of 2 items
August 5: Purchase of 6 items @ $12.50
August 8: Sale of 3 items
August 11: Sale of 3 items
August 14: Purchase of 8 items @ $13
August 16: Sale of 4 items
August 19: Sale of 3 items
August 22: Purchase of 5 items @ $13.50
August 25: Sale of 4 items
August 29: Sale of 2 items
6. Using the information provided by James Fitzgerald, compute the value of
closing inventory, based on the three inventory valuation methods.
Date Purchases Date Sale
1-Aug 120 units @ $120 6-Aug 100 units @ $140
8-Aug 50 units @ $125 10-Aug 55 units @ $145
16-Aug 20 units @ $140 25-Aug 40 units @ $160
20-Aug 30 units @ $150

7. A company has carried out its stock take at the end of its financial year. Included
in its inventories are the following items:
a. A table that cost the company £1,250. This type of table usually sells for
£1,895 but it was damaged in a flood and will therefore be sold at a
significant discount. It is expected to sell for £450
b. A wardrobe that cost the company £720 and normally sells for £995. The
wardrobe has been damaged and will cost approximately £120 to repair
at which point it can be sold for £750
c. A dresser that was made to a customer’s own specifications and cost the
company £1,832 to make. Unfortunately, the customer went bankrupt and
could not purchase the item. Due to the unusual design the dresser was
not easy to sell. After the year-end however, the company sold the dresser
for £2,250 but incurred commission costs on the sale of £105 and delivery
costs of £158
Required
Determine the value that each of the above items will be included at in the
company’s year-end inventory

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