3 On 1 August 2021, Lex Trading had 20 units of inventory valued at $4 000. During the month of August, the following purchases took place. 5 Date August 2 August 10 Details Cash purchases of 20 units of inventory for $3 500. Bought 40 units of inventory for $8 000 on credit. Lex Trading changed supplier and there was a custom duty of $200 that was not included in the price quoted. Bought 20 units of inventory for 4 500 and paid by cheque. 6 August 20 7 Lex Trading sold 40 units of inventory for $14 000 on August 15 and 40 units on 29 August 2021 for $16 000. The business records inventory using First-In-First- Out method. RE REQUIRED (a (a) Calculate the cost of sales for the month of August 2021. [2] (b) (b) Prepare the inventory account, and bring down the balance to the next month. [4] bra viends On 1 September 2021, a flood destroyed the inventory and the net realisable value of the inventory was $3 000. Lex Trading made an insurance claim to seek compensation and after validation, the insurance company would compensate 50% of the loss in two months. The accounting year of Lex Trading ends on 30 September 2021. REQUIRED State the valuation rule for inventory and explain the accounting theory applicable to the rule. [2] S (d) Prepare the journal entry to adjust the value of inventory and the insurance claim for the loss of inventory. [2] (e) State the effect and the amount of non-adjustment of impairment loss on inventory on profit and current asset. [2]