Vege Bhd is a company that sells vegetables. The following information is available from the company’s inventory records as at 31 December 2018. Spinach (RM) Carrot (RM) Broccoli (RM) Peas (RM) Mixed Vegetables (RM) Chilli (RM) Historical cost – FIFO method (in total) 213,500 122,500 178,500 21,500 50,000 25,000 NRV 135,000 84,000 65,000 35,000 70,000 15,000 Although the inventories are recorded at their cost, the company values its inventories at the Lower of Cost or Net Realisable Value (LCNRV) method due to changes in supplies and/or demands. Vege Bhd applies the cost of goods sold method and uses an Allowance Account to record for the write down of the inventory to net realisable value. REQUIRED: (Round your answers to the nearest RM) Assuming that Vege Bhd applies the LCNRV rule to item by item. Determine the LCNRV as at 31 December 2018. Prepare the journal entry at 31 December 2018 to account for the write-down of the inventory to NRV. Show a partial of Vege’s statement of financial position as at 31 December 2018 to present the information on its inventory.
Vege Bhd is a company that sells vegetables. The following information is available from the company’s inventory records as at 31 December 2018. Spinach (RM) Carrot (RM) Broccoli (RM) Peas (RM) Mixed Vegetables (RM) Chilli (RM) Historical cost – FIFO method (in total) 213,500 122,500 178,500 21,500 50,000 25,000 NRV 135,000 84,000 65,000 35,000 70,000 15,000 Although the inventories are recorded at their cost, the company values its inventories at the Lower of Cost or Net Realisable Value (LCNRV) method due to changes in supplies and/or demands. Vege Bhd applies the cost of goods sold method and uses an Allowance Account to record for the write down of the inventory to net realisable value. REQUIRED: (Round your answers to the nearest RM) Assuming that Vege Bhd applies the LCNRV rule to item by item. Determine the LCNRV as at 31 December 2018. Prepare the journal entry at 31 December 2018 to account for the write-down of the inventory to NRV. Show a partial of Vege’s statement of financial position as at 31 December 2018 to present the information on its inventory.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Vege Bhd is a company that sells vegetables. The following information is available from the company’s inventory records as at 31 December 2018.
|
Spinach (RM) |
Carrot (RM) |
Broccoli (RM) |
Peas (RM) |
Mixed Vegetables (RM) |
Chilli (RM) |
|
Historical cost – FIFO method (in total) |
213,500 |
122,500 |
178,500 |
21,500 |
50,000 |
25,000 |
|
NRV |
135,000 |
84,000 |
65,000 |
35,000 |
70,000 |
15,000 |
Although the inventories are recorded at their cost, the company values its inventories at the Lower of Cost or Net Realisable Value (LCNRV) method due to changes in supplies and/or demands. Vege Bhd applies the cost of goods sold method and uses an Allowance Account to record for the write down of the inventory to net realisable value.
REQUIRED:
(Round your answers to the nearest RM)
- Assuming that Vege Bhd applies the LCNRV rule to item by item. Determine the LCNRV as at 31 December 2018.
- Prepare the
journal entry at 31 December 2018 to account for the write-down of the inventory to NRV. - Show a partial of Vege’s statement of financial position as at 31 December 2018 to present the information on its inventory.
- Assuming that at the year-end 2018, the account of Allowance to Reduce Inventory to NRV had a credit balance of RM300,000. For the financial year end 2018, determine the amount of the gain or loss that would be recorded due to the change in Allowance to Reduce Inventory at Net Realisable Value. Prepare the related journal entry.
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