In the statement of financial position (balance sheet) of the textile trading company PT "ABADI" (unaudited) as of December 31, 2002, stated as follows:

Question: 1. By observing the things mentioned above, please make a "journal adjustment & reclassification" which will be proposed to PT "ABADI". 2. If the proposal mentioned above is approved by PT ABADI, what is the value (audited) of merchandise inventory as of December 31, 2002. 3. How to present the merchandise inventory in the statement of financial position (balance sheet) of PT "ABADI" as of December 31, 2002 which has been audited.

From the results of the examination and research of the estimated documents, the following matters were obtained: 1. In observing the inventory count, it was found that a number of silk fabrics worth Rp 25.000.000 had been severely damaged due to rain water leakage and were bitten by a rat and it was certaun that the silk fabrics would not be sold

Aset: VAA Merchandise Inventory consists of: . Silk Fabrics Wool fabric Cotton Fabric Rp Rp Rp 600.000.000 500.000.000 400.000.000 . Rp 1.500.000.000