Betty ACC1010NBS8147 has inventory which includes the follow

Betty ACC1010/NBS8147 has inventory which includes the following three items has inventory which inoludes the folowing tire iems Description Purchase Selling priceinventory Distribution costs of (stock) Tables Chairs Beds £9,000 £6,000 £6,500 £5,600 £800 £700 £10,600 £11,000 £800 Under the historical cost basis of accounting, what is the total amount to be recorded as inventory (trading stóck) in respect of these three items? a) £25,600 b) £22,700 c) £20,800 d) £23,300 (2 marks 9. If the year-end stock count had included £2,122 worth inventory delivered on 30 September 2014 but not record in the books or paid for at the balance sheet date, wh would be the correct journal to reflect this transaction? a) Debit accruals £2,122, and credit inventory £2,122 b) Debit inventory £2,122, and credit accruals £2,122- c) Debit payables £2,122, and credit purchases £2,122 d) Debit purchases £2,122, and credit payables £2,122 (2 ma

Solution

Problem 8

Historical cost means the cost of acquisition or the cost when the product was originally purchased.

Hence, under the historical cost accounting, the inventories are valued at their purchase cost.

Value of Inventory to be recorded in respect of these three items = 9,000 + 6,000 + 10,600 = 25,600

Hence, the correct option is a) 25,600

Problem 9

Inventory delivered on 30 Sept 2014 but not recorded means this transaction was not recorded at the time of purchase. Hence we need to record correctly this transaction as follows:

Debit Purchases 2,122

Credit Accounts Payables 2,122

Hence, the correct option is d) Debit Purchases 2,122 and credit payables 2,122

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