Help with adj. for stock please

jewels.p

Does anybody have an easy way of explaining adjustments for stock. I have sent two Practice Exams to my tutor and both have come back with my adjustments wrongly calculated:thumbdown:

In stock-50/ Cost £25.00/ Normal Price-£45.00/ Reduced Price-£30.00
In Stock-20/ Cost £80.00/Normal Price-£150.00/Reduced Price-£75.00
In Stock-12/Cost £20.00/Normal Price-£30.00/Reduced Price-£10.00

Adjustment is for £220 but I got £2870 as I thought you adjusted by the total of whatever was the lower of Cost and N.R.V?????????:confused1:

Any easy explanation of how to master this before exam appreciated.

Julie:001_smile:

Bluewednesday

You are right about cost and nrv.

The adjustment is £220.

All these stock items have been recorded at cost. However the net realisable value on the second item is £75 so the stock value is reduced by (20*(80-75)=100.

The nrv of the third item is £10 so the adjustment is 12*(20-10)=120.

The total adjustment to the stock valuation is (120+100)=£220.

jewels.p

Thanks for that!

Julie:001_smile: