ACCA Applied Knowledge · Financial Accounting · Inventories
Kestrel Ltd's year end is 31 December. The inventory count took place on 4 January and valued inventory at $120,000 at cost. Between 1 and 4 January, goods costing $9,000 were received from suppliers (all purchased in January) and goods with a cost of $14,000 were sold and despatched to customers. What is inventory at 31 December?
Inventory at 31 December is $125,000. Starting from the count of $120,000, add back the $14,000 cost of goods sold after the year end and deduct the $9,000 of goods received after the year end, since neither movement belongs to the year-end position.
- A$125,000Correct
- B$115,000
- C$143,000
- D$97,000
Explanation
Work back from the count date: add back items sold after the year end (+14,000) and deduct goods received after the year end (-9,000). 120,000 + 14,000 - 9,000 = 125,000. Option $115,000 reverses both adjustments.
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