help needed

lori
lori Registered Posts: 25 Dedicated contributor ? ? ?
i have to complete this for unit 5 additional questions having a mental brain block now after this weeks exams - can anyone advise me how to do them or reword them for me in dummy terms
thanks

Task 6

Orca has 20 pictures in stock at the year end, all of which cost £100. They sell for £250.

a) What should be their valuation in the year end accounts?
b) After 12 months, 16 of the pictures have sold but Orca is keen to shift the remainder and so reduces the selling price to £175. Extra marketing for these pictures costs £20 each. At what valuation should Orca include these pictures in the year end accounts?
c) One picture remains 12 months later. It is slightly damaged and will cost £60 to repair. Orca has reduced the selling price to £125. At what valuation should Orca include this picture in its year end accounts?

Task 12

Close of the following income account at the end of the year.

dr Interest received
Date
2008 Details Amount cr
Date
2008 Details Amount

30 June Bank 230.00
31 Dec Bank 255.00


:confused1::confused1::confused1:

Comments

  • sarahwilson
    sarahwilson Registered Posts: 567
    You value stock for the accounts at the lower of cost or sales price. So you will mainly use cost price as more often than not that is lower than the sales price. However if you have stock thats damaged or is now obsolete you may find the selling price is less than the items actually cost.

    Hope that helps:001_smile:
  • crispy
    crispy Registered Posts: 465 Dedicated contributor ? ? ?
    Hello,

    Task 6 is regarding stock valuation which should be valued at the 'lower of cost and net realisable value'

    A) Cost = £ 100, NRV = £ 250 - Value stock at £100
    B) Cost = £ 100, NRV = £ 155 (175-20) - Value stock at £ 100
    C) Cost = £ 100, NRV = £ 65 (125-60) - Value stock at £ 65

    Remember NRV results from selling price less any costs to bring the item into a saleable condition.

    Task 12 - Not clear of question but the journal for interest received should be: -

    Dr Bank
    Cr Interest Received

    Cr Interest Received
  • lori
    lori Registered Posts: 25 Dedicated contributor ? ? ?
    thanks for your help the last question i think is an interested received account and the two entires are on the credit side and the question was close off the account
    aaaaaaaaaahhhhhhhhhhhhh
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