Shown on the right is an extract from the year-end Trial Balance of a dealer in office coolers.

The cost of closing inventory is ascertained at £298,000. This amount includes, at £54,000, the cost of two units used as display models. These two units, if reconditioned at a cost of £500 each, may be sold for £15,000 each. Sales commission of 10% is payable on the sale of reconditioned units.

Required: 

Show the Statement of income for the year ended 30 June 2011 and state the amount at which Inventory will be reported on the Statement of financial position.

Transcribed Image Text:

Trial Balance as at 30 June 2011 £'000 Inventory as at 1.7.2010 Sales Purchases Carriage inwards Other expenses Carriage outwards Sales commission at 5% 214 648 21 224 38 49 £'000 - 980 -