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Question 3 ( 4 1 marks ) Paper Sweets Supplies Limited is located in Kingston. On the last balance sheet date, inventory amounted to $
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Paper Sweets Supplies Limited is located in Kingston. On the last balance sheet date, inventory
amounted to $ The entity conducted a stock count with the aim of valuing inventory
for financial statements purposes. The count along with the relevant invoices indicated that there
were dairynut chocolate bars as at December the last balance sheet date. Further
investigations revealed that, this amount resulted from two different invoices. The following
information relates to the chocolate bars:
Invoice Date Invoice Number Quantity Total cost
March XY $
July XY $
The inventory controller states that of the inventory as at December relates to March
invoice, while, the remainder can be attributed to July However, the financial
controller wants to ascertain the inventory balance as at December for financial reporting
purposes. The controller also understands that although the lastinfirst out LIFO method is not
allowed by the international financial reporting standards IFRSs it is acceptable by the US
GAAP. Hence, although the companys policy is the average cost method, management wants to
know the impact it has when used.
Below are data relating to the receipt and issue of dairynutchocolate bars during the period
ended December :
Required:
a Calculate the inventory value and profit for the period ended December using
the companys current inventory valuation policy. marks
b Calculate the inventory balance and profit for the period ended December using
the method acceptable by IFRS. marks
c Calculate the inventory value and profit for the period ended December using
the method acceptable by the US GAAP. marks
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