Closing Inventory Figure  Where do I get the figure?
charlotte_rahman
Registered Posts: 5
Hi, Could anyone help me with the following question please.
No entries have been made for closing inventory as at 31 March 20X7. It has been valued at sales price of £17820. The sales price of goods is always 20% higher than the cost of those goods.
Journal
Closing Inventory  SoFP Dr 14850
Closing Inventory  SoPL Cr 14850
How do I get the figure 14850, I can't work out the sum.
Thank you!
No entries have been made for closing inventory as at 31 March 20X7. It has been valued at sales price of £17820. The sales price of goods is always 20% higher than the cost of those goods.
Journal
Closing Inventory  SoFP Dr 14850
Closing Inventory  SoPL Cr 14850
How do I get the figure 14850, I can't work out the sum.
Thank you!
1
Answers

Hi Charlotte, we always use the lowest value closing stock. Here Cost of good sold is lower. As per question COS is 100%, SP is 20% higher so total of 120% and the figure is 17820. We now know the SP in % and in Figure, all we need to do is calculate what is 100%(COS). So, COS = 17820/120*100, which is 14,850. So we choose this figure and forget 17820. If that helps?0

I think I got this one wrong in the practice assessment too, when as the figure is 20% higher like VAT just divide by 1.2 for the lower figure.0

yes. Just divide my 1.2 for 20%.0

Thank you very much :)0

No worries. Happy to help.0
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