ICAEW AF · Chapter 9 · Question 8 of 9
A business's year ended on 31 December, but its inventory count took place on 7 January, when inventory at cost was valued at £48,300. Between 1 and 7 January: - goods with a selling price of £3,600 were sold; the business sells at a mark-up of 20% on cost. - goods costing £2,150 were received from suppliers. What was the value of inventory at cost at 31 December?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) £49,150
Explanation
Work back from the count to the year end. Goods sold after the year end were in inventory at 31 December, so add their cost: £3,600 x 100/120 = £3,000. Goods received after the year end were not in inventory at 31 December, so deduct £2,150. Inventory = £48,300 + £3,000 - £2,150 = £49,150.
More Inventory MCQs
- Q1Under IAS 2 Inventories, at what amount should inventories be measured?
- Q2Which of the following costs should NOT be included in the cost of inventories under IAS 2?
- Q3At the year end, a business holds an item of inventory that cost £4,200. The item is damaged and will need repairs costing £650 before it…
- Q4A business holds three product lines at its year end: Product X: cost £2,400, net realisable value £3,100 Product Y: cost £1,850, net…
- Q5A business had opening inventory of 200 units at £5 each. During the period it bought 300 units at £6 each and then 400 units at £6.50…