Adjusting inventories for financial statements ( video below)

The inventory value for the financial statements of ABC Co for the year ended 31 December 20X7 was based on an inventory count on 9 January 20X8, which gave a total inventory value of $209,050.

Between 31 December and 9 January 20X8, the following transactions took place:

$

Purchases of goods   2,150

Sales of goods (profit margin 25% on sales)   3,500

Goods returned by ABC Co to supplier     175

What adjusted figure should be included in the financial statements for inventories at 31 December 20X7?

Answer

$

Inventory count value                209,050

Less: purchases                            (2,150)

Add: sales (3,500 x 75/100)       2,625

Add: goods returned                        175

Inventory figure                           9,700

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