The financial year of XYZ Co ended on 31 December 20X2. An inventory count on January 10 20X3 gave a total inventory value of $131,825.
The following transactions occurred between January 1 and January 10.
$
Purchases of goods 1,975
Sales of goods (gross profit margin 30% on sales) 3,750
Goods returned to a supplier 200
What inventory value should be included in XYZ Co’s financial statements at 31 December 20X2?
Answer
$
Inventory count, 10 January 20X3 …………………….131,825
Purchases since end of year …………………………….(1,975)
Cost of sales since end of year (3,750 x 70%) …….. 2,625
Purchase returns since end of year ……………………. 200
Inventory at 31 December 20X2…………………… 132,675