Alma, a supplier of rice to school and office canteens within the Kuching and Samarahan area, made the following purchases and supplies during the year ended 31 December 2019.  

 

Month of Purchase	Number of bags purchased	Cost per bag
January	800	RM8.50
April	600	RM9.50
June	700	RM10
October	550	RM9
November	1,000	RM8

 

Each bag of rice is sold at RM11 per bag. Due to a glut in the overall supply of rice, since October 2019, the cost price per bag has dropped.  On 31 December 2019, if Alma were to make a new purchase, it would cost her only RM6 per bag.  In order not to lose her customers, Alma would have to reduce her selling price.   

 

At reporting date, 31 December 2019, 100 bags of rice were left unsold.  Alma adopts the First In-First Out (FIFO) method of managing its inventory.  

 

Required:

For each of the following situation, and in accordance with the measurement basis of MFRS 102 Inventories, determine the amount of inventory to be shown in the statement of financial position on 31 December 2019.   Where appropriate, show journal entries for the inventory write-down.

1. Alma would have to reduce her selling price from RM11 to an estimated RM7 per bag.    
2. Alma would have to reduce her selling price from RM11 to an estimated RM9 per bag.