Inventory Valuation - Additional Question Set: Questions

ADZ & MT Inventory Valuation – Additional Question Set 1
CHAPTER
Inventory Valuation – Additional Question Set 04

QUESTIONS
Q.1. M/s. Subhalaxmi Traders find out the following historical cost and net realisable value for various types of
inventories. Find out value of Closing Stock in accordance with AS-2 (Revised) – Valuation of Inventories
issued by ICAI.
Inventory Categories 01 02 03 04 05 06
Historical Cost 17,400 20,100 18,200 16,500 15,400 21,400 = 1,09,000
Net Realisable Value 12,200 27,400 19,100 17,200 16,800 20,900 = 1,13,600
Q.2. A firm has two products A and B. It analyses its costs for the products as follows:
A (`) B (`)
Materials 1,20,000 1,40,000
Labour 80,000 1,00,000
Production Expenses 70,000 70,000
Administration Expenses 50,000 50,000
Advertising 30,000 30,000
3,50,000 3,90,000
Production was 20,000 units of A and 30,000 units of B. The selling price was ` 20 per unit of A but the price
of B was only ` 10; agents in both cases received commission @ 5% of the selling price. The closing stock was
2,000 units and 3,000 units of A and B respectively. What is the value that should be put on the closing stock?
Q.3. The following are the details of a spare part of Sriram Mills:
1-1-06 Opening Stock Nil
1-1-06 Purchases 100 units @ ` 30 per unit
15-1-06 Issued for consumption 50 units
Find out the value of stock as on 31-3-06 if the company follows:
1. First in First Out basis
2. Last in First Out basis
3. Weighted Average basis
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2 Chapter 04 – Inventory Valuation ADZ & MT
Q.4. A manufacturer has the following record of purchase of a condenser which he uses while manufacturing radio
sets:
Purchases were as follows:
Date Quantity (Units) Price per (Unit)
Dec-4 900 5.00
Dec-10 400 5.50
Dec-11 300 5.50
Dec-19 200 6.00
2600
Value the closing stock under different methods
Issues were made as follows
Date Quantity (Units)
Dec-5 600
Dec-12 400
Dec-29 600
Q.5. From the following particulars for the years 2004 and 2005 determine the value of the closing stock at the
end of 2005.
2004 (`) 2005 (`)
Opening Stock 20,000 30,000
Purchases 1,20,000 1,90,000
Sales 2,00,000 2,40,000
Uniform rate of gross profit may be assumed.
At the end of 2005, goods purchased were received, but no entry was made for this credit purchase since
invoice was not received. These goods cost ` 20,000.
Q.6. X who was closing his books on 31-3-2006 failed to take the actual Stock which he did only on 9th April, 2006,
when it was ascertained by him to be worth ` 25,000. It was found that sales are entered in the sales book
on the same day of dispatch and return inwards in the return book as and when the goods are received back.
Purchases are entered in the purchases day book once the invoices are received.
It was found that sales between 31-3-2006 and 9-4-2006 as per the sales day book are ` 1,720. Purchases
between 31-3-2006 and 9-4-2006 as per purchases day book are ` 120, out of these goods amounting to
` 50 were not received until after the stock was taken. Goods invoiced during the month of March, 2006 but
goods received only on 4th April, 2006 amounted to ` 100. Rate of gross profit is 33 1/3% on cost.
Ascertain the value of physical stock as on 31-3-2006.
ADZ & MT Inventory Valuation – Additional Question Set 3
Q.7. A trader prepared his accounts on 31st March, each year. Due to some unavoidable reasons, stock taking
was done on 15th March, 2006 on which date the total cost of goods in his godown came to ` 50,000. The
following facts were established between 15th March and 31st March, 2006.
(a) Sales ` 41,000 (including cash sales ` 10,000)
(b) Purchases ` 5,034 (including cash purchases ` 1,990)
(c) Sales Returns ` 1,000
Goods are sold by the trader at a profit of 209& on sales.
You are required to ascertain the value of stock on hand on 31st March, 2006.
Q.8. Raj Ltd. prepared their accounts for financial year ended on 31st March 2019. Due to unavoidable
circumstances actual stock has been taken on 10th April 2019, when it was ascertained at ` 1,25,000. It has
been found that;
(i) Sales are entered in the Sales Book on the day of dispatch and return inwards in the Returns Inward
Book on the day of the goods received back.
(ii) Purchases are entered in the Purchase Book on the day the Invoices are received.
(iii) Sales between 1st April 2019 to 9th April 2019 amounting to ` 20,000 as per Sales Day Book.
(iv) Free samples for business promotion issued during 1st April 2019 to 9th April 2019 amounting to
` 4,000 at cost.
(v) Purchases during 1st April 2019 to 9th April 2019 amounting to 110,000 but goods amounts to ` 2,000
not received till the date of stock taking.
(vi) Invoices for goods purchased amounting to ` 20,000 were entered on 28th March 2019 but the goods
were not included in stock.
Rate of Gross Profit is 2596 on cost.
Ascertain the value of Stock as on 31st March 2019.

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Inventory Valuation – Additional Question Set 04

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