Stock valuation again Help

111111
111111 New MemberRegistered Posts: 6
the stock consists of food and drink and has been value on 30 april at 7,000.
this figure includes some frozen food that had cost 1,100 but will thrown out due to a problem with the freezer. although polar insurance company has agreed to pay for the full cost of the food, no money has been yet received. also included in the stock valuation figure are 20 bottles of wine. these had originally cost 9.50 each since they are not popular they are to be sold off at 7.00 per bottle.

Could you please please write me steps how to calculat the final figure to include in ETB

this stock valuation is something i still dont get.

Thank you

Comments

  • crispy
    crispy Trusted Regular SouthamptonRegistered Posts: 456
    Hello,

    Original Stock Value.......................7,000
    Stock Written Off.........................(1,100)
    Stock Written down to NRV................(50) 20 x (9.50-7.00)
    Adjusted Stock Value.....................5,850

    Journals in the ETB:

    Dr Cost of Sales (P&L) 1,150
    Cr Stock (Balance Sheet) 1,150

    Stock should be valued at lower of cost and Net Realisable Value (NRV = Selling price less any costs to bring the item to a saleable condition).
  • amyjayne27
    amyjayne27 Trusted Regular Registered Posts: 314
    Hi 111111,

    I am really struggling with stock vaulation aswell, I think I may have to phone my tutor and get him to explain it to me.

    I dont understand how to caculate FIFO, LIFO and AVCO on a question, can anyone explain this to me?

    Amy
  • PGM
    PGM Font Of All Knowledge Registered Posts: 1,954
    crispy wrote: »
    Hello,

    Original Stock Value.......................7,000
    Stock Written Off.........................(1,100)
    Stock Written down to NRV................(50) 20 x (9.50-7.00)
    Adjusted Stock Value.....................5,850

    Journals in the ETB:

    Dr Cost of Sales (P&L) 1,150
    Cr Stock (Balance Sheet) 1,150

    Stock should be valued at lower of cost and Net Realisable Value (NRV = Selling price less any costs to bring the item to a saleable condition).

    I'd have thought Cr stock as you did, but then Dr a provison for insurance expected?
  • crispy
    crispy Trusted Regular SouthamptonRegistered Posts: 456
    I think you are right. How about:-

    Dr Insurance Debtor 1,100
    Dr Cost of Sales 50
    Cr Stock 1,150

    Looks better
  • PGM
    PGM Font Of All Knowledge Registered Posts: 1,954
    crispy wrote: »
    I think you are right. How about:-

    Dr Insurance Debtor 1,100
    Dr Cost of Sales 50
    Cr Stock 1,150

    Looks better

    Yeah I think that would be right.
  • 111111
    111111 New Member Registered Posts: 6
    Hi Amy,

    I difficult for me as well I understand the way but if I started to calculated by myself I get confused. :(
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