E 2-7 - Lower of cost and NRVThe closing inventory at cost of an entity amounted to P284,700. Thefollowing items were included at cost in the total:400 coats, which had cost P80 each and normally sold for P150each. Owing to a defect in manufacture, they were all sold afterthe reporting dateamounted to 5% of the proceeds.50% of their normal price. Selling expenses800 skirts, which had cost P20 each. These too were found to bedefective. Remedial work costs P5 per skirt and selling expensesfor the batch totaled P800. They were sold for P28 each.Required:Compute for the following:1. Amount of write-down to NRV.2. Amount to be reported as Inventories in the statement of financialposition.

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E 2-7 - Lower of cost and NRV The closing inventory at cost of an entity amounted to P284,700. The following items were included at cost in the total: 400 coats, which had cost P80 each and normally sold for P150 each. Owing to a defect in manufacture, they were all sold after the reporting date at 50% of their normal price. Selling expenses amounted to 5% of the proceeds. 800 skirts, which had cost P20 each. These too were found to be defective. Remedial work costs P5 per skirt and selling expenses for the batch totaled P800. They were sold for P28 each. Required: Compute for the following: 1. Amount of write-down to NRV. 2. Amount to be reported as Inventories in the statement of financial position.

E 2-7 - Lower of cost and NRV The closing inventory at cost of an entity amounted to P284,700. The following items were included at cost in the total: 400 coats, which had cost P80 each and normally sold for P150 each. Owing to a defect in manufacture, they were all sold after the reporting date at 50% of their normal price. Selling expenses amounted to 5% of the proceeds. 800 skirts, which had cost P20 each. These too were found to be defective. Remedial work costs P5 per skirt and selling expenses for the batch totaled P800. They were sold for P28 each. Required: Compute for the following: 1. Amount of write-down to NRV. 2. Amount to be reported as Inventories in the statement of financial position.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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