Homework Help is Here – Start Your Trial Now!
Business
Accounting
a calculation of the value of inventories to be included in the year end (31 r 20X1) financial statements, following IAS 2 - Inventories. port to the chief accountant explaining the reasons (under IAS 2) for valu ories on the bases you applied in (a).

a calculation of the value of inventories to be included in the year end (31 r 20X1) financial statements, following IAS 2 - Inventories. port to the chief accountant explaining the reasons (under IAS 2) for valu ories on the bases you applied in (a).

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question
100%
Kenton Shoes Ltd is a small company that sells a range of Casual and Work shoes through the internet. The accountant has asked you calculate the value of the company's closing inventory on 31 December 20X1 for inclusion in the financial statements. The following additional information is available: 1. Pairs of shoes counted in the warehouse at the year-end stocktake were as follows:- Casual Shoes 10,000, Work Shoes 5,000 pairs 2. 2,000 pairs of Casual Shoes were received into stores on 3 January 20X2. The goods were ordered on 23 December 20X1 and invoiced on 24 December but were still in transit from the US supplier when the inventory count was being performed. The invoice for these goods is included in the purchase ledger and the trade payable has been recognised on 31 December 20X1. 3. Due to an increase in the price of toughened leather, the supplier of Work Shoes increases the cost of each pair from 1 November 20X1. Since this date, Kenton Shoes has received 3,000 pairs in its stores. 4. Selling price and cost per pair of shoes in 20X2. Casual Shoes Work Shoes £ £ Purchase cost: 6 12 01/01/20X2 - 01/11/20X2 01/11/20X2 - Present 6 17 5. It is company policy to use the FIFO method of recording the flow of inventory costs. Required:- a) Prepare a calculation of the value of inventories to be included in the year end (31 December 20X1) financial statements, following IAS 2- Inventories. b) Write a report to the chief accountant explaining the reasons (under IAS 2) for valuing the inventories on the bases you applied in (a).
Transcribed Image Text:Kenton Shoes Ltd is a small company that sells a range of Casual and Work shoes through the internet. The accountant has asked you calculate the value of the company's closing inventory on 31 December 20X1 for inclusion in the financial statements. The following additional information is available: 1. Pairs of shoes counted in the warehouse at the year-end stocktake were as follows:- Casual Shoes 10,000, Work Shoes 5,000 pairs 2. 2,000 pairs of Casual Shoes were received into stores on 3 January 20X2. The goods were ordered on 23 December 20X1 and invoiced on 24 December but were still in transit from the US supplier when the inventory count was being performed. The invoice for these goods is included in the purchase ledger and the trade payable has been recognised on 31 December 20X1. 3. Due to an increase in the price of toughened leather, the supplier of Work Shoes increases the cost of each pair from 1 November 20X1. Since this date, Kenton Shoes has received 3,000 pairs in its stores. 4. Selling price and cost per pair of shoes in 20X2. Casual Shoes Work Shoes £ £ Purchase cost: 6 12 01/01/20X2 - 01/11/20X2 01/11/20X2 - Present 6 17 5. It is company policy to use the FIFO method of recording the flow of inventory costs. Required:- a) Prepare a calculation of the value of inventories to be included in the year end (31 December 20X1) financial statements, following IAS 2- Inventories. b) Write a report to the chief accountant explaining the reasons (under IAS 2) for valuing the inventories on the bases you applied in (a).
Expert Solution
steps

Step by step

Solved in 3 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Cost Sheet
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS