Closing stock and accrual query

sscors

Hi

wondering if anyone understands this question? Please help if so

The question involves creating an ETB


Closing Stock:

The adjustments for closing stock are as follows:

Stock has been valued at cost on 30 April 20X3 (year end) at £119,360. However this figure includes old stock the details of which are as follows:

Cost price of old stock: 3660
NRV old stock: 2060

Also included is a badly damaged car door which was to have been sold for £80 but will now have to be scrapped. The cost price of the door was £60.

Not really sure how to incorporate all of this info to create a figure for closing stock on ETB.


Rent accrual:

In the trial balance (year end 30 April 20X3)

Rent 17,300

The adjustment info is as follows

Rent payable by the business

For period to 31 july 20X2 - 1500 per month
From 1 August 20X2- 1600 per month

Any hints about how to work this accrual would be mucho appreciated

Richard

sscors wrote: »

Hi

wondering if anyone understands this question? Please help if so

The question involves creating an ETB


Closing Stock:

The adjustments for closing stock are as follows:

Stock has been valued at cost on 30 April 20X3 (year end) at £119,360. However this figure includes old stock the details of which are as follows:

Cost price of old stock: 3660
NRV old stock: 2060

Also included is a badly damaged car door which was to have been sold for £80 but will now have to be scrapped. The cost price of the door was £60.

Not really sure how to incorporate all of this info to create a figure for closing stock on ETB.


Rent accrual:

In the trial balance (year end 30 April 20X3)

Rent 17,300

The adjustment info is as follows

Rent payable by the business

For period to 31 july 20X2 - 1500 per month
From 1 August 20X2- 1600 per month

Any hints about how to work this accrual would be mucho appreciated

Stock has to be recorded at the lower of cost and net realisable value (NRV), if the stock figure of £119,360 includes stock at the cost price of £3,660, the stock is overstated and needs to be reduced. Cost £3,660 - NRV £2,060 = reduction of £1,600.

The door has also been scrapped, so this will reduce the stock by the cost price of £60.

Therefore, the stock figure needs to be £119,360 - £1,600 - £60 = £117,700

The double entry will be Dr Closing stock (balance sheet) £117,700 Cr Closing stock (p&l) £117,700

or, if you have already included the £119,360 in the opening trial balance, the adjustment column of the ETB will be Dr Closing stock (p&l) £1,660 Cr Closing stock (balance sheet) £1,660

The rent charge for the year needs to be:

May - July : 3 x £1,500 plus August - April : 9 x £1,600.

This gives total rent for the year of £18,900. However, the TB only shows £17,300 so the charge for one month is missing. To adjust, Dr Rent £1,600 and Cr Accruals £1,600.

Hope this makes sense!

sscors

Thanks so much your a star :001_smile: I totally understand it now