Answered: Presented below is a data relative to…

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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Presented below is a data relative to PINK SHEET company limited at the end of 31st December, 2012

Stock Item	Number of Units In Inventory	Original cost per unit GH	Unit Selling Price
A	4,000	12.5	20
B	5,000	15	19
C	2,500	10	21
D	7,500	15	18.5
E	4,800	14	20

Stock items B and E have become obsolete as a result of new discoveries. Affidavit, an auctioneer has agreed to find buyers for the stock items B and E for a 10% commission on the sales values. It is estimated that stock item B will have to be marked down by 50% whilst stock item E by 25% on the cost price. All other costs are estimated at GH 1 per unit of both obsolete stock items.

You are required to determine the value of stock to be included in the Financial Position as at 31st December, 2012. State the bases of valuation of the stock items. Show all calculations.

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