Unit 8.1,8.2 Irr Debt & Inventory valuation

Franco is in business as a sole trader. The following balances were extracted from his books.

            Provision for doubtful debts              1 400

            Trade receivables                              45 000

Trade receivables, $3 000, were considered irrecoverable. A provision for doubtful debts of 5% is to be maintained.

STEP 1: minus __ from T_

3000, TR

Franco is in business as a sole trader. The following balances were extracted from his books.

            Provision for doubtful debts              1 400

            Trade receivables                              45 000

Trade receivables, $3 000, were considered irrecoverable. A provision for doubtful debts of 5% is to be maintained.

STEP 1: minus 3 000 from TR
STEP 2: find _% of new T_

5, TR

Franco is in business as a sole trader. The following balances were extracted from his books.

            Provision for doubtful debts              1 400

            Trade receivables                              45 000

Trade receivables, $3 000, were considered irrecoverable. A provision for doubtful debts of 5% is to be maintained.

STEP 1: minus 3 000 from TR
STEP 2: find 5% of new TR: (45000-3000) x 5% = $2100
STEP 3: As prov. DD has __ (inc/dec), make new e__ entry w/ diff: 2100-__ = 700

inc, expense, 1400

Irrecoverable debt & incr. prov DD is what type? (AED LeqI)

expense

Provision for DD is what type?

-TR

If decr in prov for DD, it is a __:

Add: __ __
Decrease in prov. for DD	x

profit, other income

Prov. for DD in the Journal

	DR	CR
D__ d__	x
P__ for DD		x

doubtful debt, provision

What is prudence?

don’t overstate assets/profits & understate liabilities/loss

What concept is involved w/ inventory valuation?

prudence

When valuing inventory, use the l__ cost & NRV

lower

Net realisable value (NRV) formula

resale + COGS

She provided the following information about her inventory (stock) on 31 January 2024.

Type	Number of units	Cost per unit $	Selling price per unit $
A B	360 520	22 14	24 12

ADDITIONAL INFO
Carriage inwards of $1 per unit was charged on Type A. This is not included in the above figures.
40 units of Type B were found to be damaged and had to be destroyed.

What is the new Q for Type B?

480

She provided the following information about her inventory (stock) on 31 January 2024.

Type	Number of units	Cost per unit $	Selling price per unit $
A B	360 520 {-40}	22 14	24 12

ADDITIONAL INFO
Carriage inwards of $1 per unit was charged on Type A. This is not included in the above figures.
40 units of Type B were found to be damaged and had to be destroyed.

TYPE A: 360 x __ = 7920 + (__ x __) = 8280

22, 360, 1

She provided the following information about her inventory (stock) on 31 January 2024.

Type	Number of units	Cost per unit $	Selling price per unit $
A B	360 520 {-40}	22 14	24 12

ADDITIONAL INFO
Carriage inwards of $1 per unit was charged on Type A. This is not included in the above figures.
40 units of Type B were found to be damaged and had to be destroyed.

TYPE A: 360 × 22 = 7920 + (360 × 1.00) = 8280
TYPE B: 480 x __ = 5760

12

She provided the following information about her inventory (stock) on 31 January 2024.

Type	Number of units	Cost per unit $	Selling price per unit $
A B	360 520 {-40}	22 14	24 12

ADDITIONAL INFO
Carriage inwards of $1 per unit was charged on Type A. This is not included in the above figures.
40 units of Type B were found to be damaged and had to be destroyed.

TYPE A: 360 × 22 = 7920 + (360 × 1.00) = 8280
TYPE B: 480 × 12 = 5760
Total value of inventory 31 Jan 2024 = 8280 + __ = 14040

5760