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Implication of Choice of Inventory Valuation Methods on Profit Tax and Closing Inventory - Accounting and Finance Assignment
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Assignment Task
Introduction
According to Syanbala(2012), inventory is seen as the primary and most valuable current asset far a trading or manufacturing organization. It was defined by Omolechinwa(1991) as the current asset comprising goods possessed with the intent of creating goods for sale or to sell in the future. Pandy(1991) views inventory as the product manufactured to sell, including its components. For trading companies, inventory comprises goods that are to be sold, for manufacturing companies, it comprises of raw materials used for production. Inventories including, raw materials, work in progress,
Analysis using Case Question to find out the implication of Two Methods of Inventory Valuation on Accounting Profit, Tax and Closing Inventory
| Description | Quantity Sold | Unit Cost | Total Amount | ||
|
Feb. Sales |
20,000 |
|
4.00 |
|
80,000 |
|
June. Sales |
28,000 |
10,000 |
4.00 |
40,000 |
|
|
|
|
18,000 |
4.15 |
74,700 |
|
|
|
|
28,000* |
|
114,700** |
114,700 |
|
Oct. Sales |
15,000 |
2,000 |
4.15 |
8,300 |
|
|
|
|
13,000 |
4.25 |
55,250 |
|
|
|
|
15,000* |
|
63,550** |
63,550 |
|
Dec. Sales |
10,000 |
|
4.25 |
|
42,500 |
|
COST OF SALES |
|
|
|
|
300,750 |
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