UOL-M.PhilIAS 2: Inventories
Questions
Question-1
A Shadur Retail has the following following purchases and sales of a particular product product line. Units
Purchase
Units
Selling
purchased
price per unit
sold
price per unit
Rs.000
Rs.000
2 December
100
500
60
530
16 December
60
503
80
528
30 December
70
506
50
526
14 January
50
509
70
524
28 January
80
512
50
522
11 February
40
515
40
520
At 31 December the physical physical inventory was 150 units. The cost of inventories is determined on a FIFO basis. basis. Selling and distribution costs amount amount to 5% of selling price and general administration expenses amount to 7% of selling price. Required: (a)
State any three reasons why why the net realisable value of inventory may may be less than cost.
(b)
Calculate to the nearest Rs.000 Rs.000 the value of of inventory at 31 December (i)
at cost
(ii)
at net realisable value
(iii)
at the the amount to be included included in the financial statements statements in accordance with IAS 2
UOL-M.PhilIAS 2: Inventories
Questions
Question-2
Khewra Manufacturing was formed on 1 January 2015. The entity manufactures and sells a single product and values it on a first-in, first-out basis. One tonne of raw material is processed into one tonne of finished goods. The following details relate to 2015. Purchases of raw materials Purchases:
1,000 tonnes of raw materials per week
Price:
Rs.100,000 per tonne on 1 January, increasing to Rs.150,000 per tonne on 1 July
Import duties:
Rs.10,000 per tonne
Transport from docks docks to factory: Rs.20,000 per tonne Production costs Production capacity:
1,500 tonnes per week
Variable costs:
Rs.25,000 per tonne
Fixed costs:
Rs.30,000,000 per week
Sales details Selling price:
Rs.240,000 per tonne
Delivery costs to customers:
Rs.8,000 per tonne
Selling costs:
Rs.4,000 per tonne
Inventories at 31 December 2015 Raw materials:
2,000 tonnes
Finished goods:
2,000 tonnes
There is a ready market for raw materials and the NRV of the raw materials is higher than its cost. Required Calculate and disclose the value of inventories at 31 December 2015 in accordance with IAS2.
UOL-M.PhilIAS 2: Inventories
Questions
Question-3
NKL Enterprises produces a single product. On July 31, 2015, the finished goods inventory consisted of 4,000 units valued at Rs. 220 per unit and the inventory of raw materials was worth Rs. 540,000. For the month of August 2015, the books of account show the fo llowing: Rupees Raw material purchases
845,000
Direct labour
735,000
Selling costs
248,000
Depreciation on plant and machinery
80,000
Distribution costs
89,560
Factory manager’s salary
47,600
Indirect labour
148,000
Indirect material consumed
45,000
Other production overheads
84,000
Other accounting costs
60,540
Other administration overheads
188,600
Other information: (i)
8,000 units of finished goods were produced during August 2015.
(ii)
The value of raw materials on August 31, 2015 amounted to Rs. 600,000.
(iii)
There was was no work-in-progress at the start of the month. However, However, on August August 31, the value of work-in-progress is approximately a pproximately Rs. 250,000.
(iv)
5,000 units of finished goods were available in inventory as on August 31, 2015.
Required: Compute the value of closing inventory of finished goods as on August 31, 2015 based on weighted average cost method.
UOL-M.PhilIAS 2: Inventories
Questions
Question-4
AK Limited follows a perpetual inventory inventory system. Following Following information is available from the accounting records for the month of January 2016:
Inventory as at 31 December 2015 Purchase on 7 January 2016 Purchase on 13 January 2016 Purchase on 31 January 2016 Sale on 12 January 2016 Sale on 25 January 2016
Quantity
Amount (Rs.)
3,500 3,700 4,200 2,000 3,000 5,500
35,000 44,400 58,800 26,000 60,000 115,500
Additional Additional information: information:
(i)
100 units out of 4,200 units purchased on 13 January 2016 were found defective and returned to supplier on 28 January 2016.
(ii)
Inventory count conducted on 31 January 201 6 revealed that 4,820 units were physically available.
Required:
(a)
Prepare inventory ledger cards for the month of January 2016 under the perpetual system showing quantity, unit cost and value under each of the following basis of inventory of inventory valuation: FIFO Weighted average
(b)
Under weighted average method, prepare journal entries to record the defective defective items returned to supplier and surplus/shortfall in the inventory due to physical count.
