Closing Inventory Figure - Where do I get the figure?

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charlotte_rahman
charlotte_rahman Registered Posts: 5
in AAT Level 3 (Level 6 in Scotland)
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!

Comments

  • rakeshsuwal
    rakeshsuwal Registered Posts: 79
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    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?
  • Adele69
    Adele69 Registered Posts: 320
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    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.
  • rakeshsuwal
    rakeshsuwal Registered Posts: 79
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    yes. Just divide my 1.2 for 20%.
  • charlotte_rahman
    charlotte_rahman Registered Posts: 5
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    Thank you very much :-)
  • rakeshsuwal
    rakeshsuwal Registered Posts: 79
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    No worries. Happy to help. :)

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