(i) How many units are left in inventory?(ii) What is the cost of closing inventory for the period?(iii)What is the gross profit for the period?(iv)What would be the impact on gross profit on discovering that inventory costing £100 with anet realisable value of £120 had been omitted from the original inventory valuation?I. An increase of £100II. An increase of £120III. A decrease of £20IV. No effect at all A business commenced on 1 January and purchased the following units of inventory:Unit price(£)2.00No ofValueunits760JanuaryFebruaryMarch3804002.5010003502.508751155AprilMayJune4202.754303.00129014304403.25Total24206510In June 1,420 units were sold for £7,000. The business uses the FIFO method to value itsinventory(1) How many units are left in inventory?(ii) What is the cost of closing inventory for the period?(ii) What is the gross profit for the period?(iv)What would be the impact on gross profit on discovering that inventory costing £100 with anet realisable value of £120 had been omitted from the original inventory valuation?1. An increase of £100II.III.An increase of £120A decrease of £20IV.No effect at all

(1) Quantity of closing stock = Quantity of opening stock + Quantity purchased - Quantity sold…

Answered: A business commenced on 1 January and…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter7: Inventories: Cost Measurement And Flow Assumptions

Section: Chapter Questions

Problem 14RE: On January 1 of Year 1, Dorso Company adopted the dollar-value LIFO method of inventory costing....

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(i) How many units are left in inventory?
(ii) What is the cost of closing inventory for the period?
(iii)What is the gross profit for the period?
(iv)What would be the impact on gross profit on discovering that inventory costing £100 with a
net realisable value of £120 had been omitted from the original inventory valuation?
I. An increase of £100
II. An increase of £120
III. A decrease of £20
IV. No effect at all

A business commenced on 1 January and purchased the following units of inventory:
Unit price
(£)
2.00
No of
Value
units
760
January
February
March
380
400
2.50
1000
350
2.50
875
1155
April
May
June
420
2.75
430
3.00
1290
1430
440
3.25
Total
2420
6510
In June 1,420 units were sold for £7,000. The business uses the FIFO method to value its
inventory
(1) How many units are left in inventory?
(ii) What is the cost of closing inventory for the period?
(ii) What is the gross profit for the period?
(iv)What would be the impact on gross profit on discovering that inventory costing £100 with a
net realisable value of £120 had been omitted from the original inventory valuation?
1. An increase of £100
II.
III.
An increase of £120
A decrease of £20
IV.
No effect at all

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