Question No: 3 10 Marks Case a) Mr. Mohammed is the Managing Director and major shareholder of Ohoud Perfumes LLC, a wholesale perfume business. He has asked you to assist in the preparation of the year-end financial statements of the company. The inventories at the close of business on 30 December, 2019 were valued at cost at OMR 49,477. However, included in this balance were some items which had cost OMR 8,200 but it is estimated that they could now be sold for only OMR 4,800. The purchases figure includes items to the value of OMR 2,000 which Mohammed took for personal use and for gifts to friends. Case (b) In a trading company, beginning of the inventory has got the cost value of OMR 72,000 and its retail value of inventory was OMR 92,000. During the year the company has purchased inventories at a cost of OMR 280,000 and but its retail value was OMR 400,000. The freight charges for the purchase of the whole year amounted to OMR 16,320 and cost of packing during the year was OMR 10,880. The cost of goods available for sale OMR 379,200 and its retail value was OMR 492,000. The retail value of the sales during the year was OMR 396,000 Required: Case (a) Mr. Mohammed is seeking your advice as an accountant about the valuation of inventory and the adjustments to be made on the above situation. What amount should have to be included and excluded in the value of inventory and what amounts need to be charged as an expense? (5 Marks) Case (b) From the above information assess the cost of goods available for sale and its corresponding retail value and also the management is asking to find out the cost value and retail value of ending inventory. On the role of an accountant how would you arrive at the value of ending inventory for the company by using both cost value and retail value? Explain the steps to arrive at value of inventory elaborately. (5 Marks) Page 5 of 7