A trading companys financial year ended on Thursday 31st March2022, but it was not practicable to carry out the stocktaking until Sunday 3rd April 2022, when the store was closed for business. It was found that value of the inventory in the store on that date was 95,728. During the period 1st April to 2nd April 2022, the following transactions took place:

1. Goods received and placed into stock 5,214
2. Goods returned to suppliers 986
3. Sales 22,514
   4. Goods returned by customers 1,574
   5. The companys normally sells goods at a profit margin of 20%.

Required

1. Explain the rationale behind the accounting treatment of inventory according to IAS 2. Credit will be given for reference to relevant accounting concepts.

(120 words)

Draw up a statement showing the value of the inventory at 31st March 2022

(120 words)

3) Prepare the journal entries to record the inventory at 31st March 2022