Current Cost Accounting

Esquires Ltd commences business with $15,000 in October, when the cost of inventory was $5 per unit. It use all the cash to purchase inventory. All the inventory was sold during the month for $10 per unit. At the end of October, the cost of inventory is $7 per unit.

a) Applying financial capital, calculate the holding on gain or loss on the inventory.

b) Apply physical capital, calculate the minimum amount of capital that should be retained in the business.