FA – L1 – Q45 – Inventory

Record inventory in ledger accounts and prepare trading account for Mensah and Associates for 20X9, adjusting for post-year-end transactions.

Question

Mensah and Associates carried out a physical count on 31 December 20X8 and finds GH₵10,000 of inventory in its warehouse.
During the year ended 31 December 20X9 the company makes GH₵70,000 of sales and buys GH₵58,000 of supplies.
The company carries out a physical count for the year ended 31 December 20X9 on 7 January 20X9 and finds GH₵15,000 worth of goods. In the six day intervening period there were sales of goods which had cost GH₵4,800 and deliveries inwards of goods costing GH₵8,000.

Required
Record inventory in the relevant ledger accounts and prepare the trading account for inclusion in the statement of profit or loss for the year ended 31 December 20X9.

Answer

Inventory a/c

Date	Details	GH₵	Date	Details	GH₵
1 Jan 20X9	Balance b/d	10,000	31 Dec 20X9	Trading a/c	10,000
31 Dec 20X9	Trading a/c	11,800	31 Dec 20X9	Balance c/d	11,800
		21,800			21,800
1 Jan 20X0	Balance b/d	11,800

Trading account for the year ended 31 December 20X9

	GH₵	GH₵
Revenue		70,000
Cost of sales
Opening inventory	10,000
Purchases	58,000
	68,000
Closing inventory (W)	(11,800)
		56,200
Gross profit		13,800

Working
Inventory at 7 January 20X9: 15,000
Less Deliveries: (8,000)
Add back Sales at cost: 4,800
= 11,800

Tags: Closing Inventory, Cost of Sales, Financial Statements, Inventory, Ledger accounts, Physical Count, Purchases, Sales, Sole Trader, Trading Account
Level: Level 1

Topic: Inventory

Uploader: Samuel Duah