Financial Statements Profit and Loss

pari

In my exam i had this question which I struggled to solve.
When you prepare the statement of profit and loss, in the calulation of cost of sales (opening inventory + purchases - inventory) I had a note came up which was not included with the closing inventory saying that "there is a worth of inventory (e.g £100). this inventory will make £50 profit (for example). this is not included in closing inventory" How do you include/deduct the note with the closing inventory calculation?
please help!
Thanks in advance

CeeJaySix

Inventory is valued at the lower of cost and net realisable value. As the inventory will make a profit in your example, cost must be the lower. I assume the 'worth' of inventory you mention is the sale price; cost will be the sale price less the profit on that sale ie. £100 - £50 = £50. Therefore increase your inventory by £50 (which will decrease your cost of sales).

pari

Thanks for the help CeeJaySix