sarah glass exam 1 unit 5- stocks

imota

I am doing practice examination 1-Sarah Grass. I'm not sure about question 2.1 (d) stocks was valued at cost on 30 June 2004 at £30,040. This includes £625 which is the cost of a carpet that is dirty and needs clening. The cost of cleaning it will be £50, and the carpet can then be sold for £300.

I think I need do that:

Stock at 30 june 2004 £30.040
Less: cost of stock where cost lower than net realisable value
( I included here £50 of cleaning cost)£625+£50= (£685)
Add: net realisable value(expected sold price) £300

Closing stock £29655

If I am wrong, please help me

jewels.p

I just got this exam back and got it wrong!:thumbdown:

Your closing stock is correct at 29665:thumbup1:

Julie:001_smile:

crispy

Hello,

Your closing stock figure looks goods to me, however have a look at the way you calculated it.

Stock is valued at lower of cost and NRV, so in this example:

Cost = £ 625 (Don't add the £ 50)
NRV = £ 250 (ie: £ 300 less the £ 50 to get the item to a sellable condition)

Therefore: £ 30,040 - £ 625 + £ 250 = £ 29,655

Closing stock figure is the same but if you were asked to value the dirty carpet then you should use the £ 250 and not £ 300.

Hope this helps.

imota

Thank you for all your help. Crispy thank you for your explanation help me a lot.


Imota