Glasgow clothing Ltd (Glasgow) purchases plain heavy duty jackets from a Turkish supplier and then applies either a wate
Posted: Wed May 04, 2022 6:44 am
Glasgow clothing Ltd (Glasgow) purchases plain heavy duty
jackets from a Turkish supplier and then applies either a
waterproof or an anti-corrosive coating to them before selling
them. You are given the following information:
1. The FIFO method of valuation is applied for inventory
valuation purposes.
2. Details of opening inventory and purchases of plain jackets
from the Turkish supplier were as follows during 2016
3. Jackets counted in the warehouse at the inventory count on 31
December 2016 were as follows: Plain jackets 10,000 units
Waterproof 9,000 units Anti-corrosive 3,000 units.
4. As a result of the increase in crude oil prices, the cost of
both the waterproof and anti-corrosive coating increased from 1
October 2016. Since then Glasgow has coated 4,000 units of
waterproof jackets and 2,000 units of the anti-corrosive jackets.
Costs of coating the jackets, per unit, during 2016 were as
follows:
5. From 1 January 2017 new legislation has banned the use of
synthetic yarn in anticorrosive jackets. As Glasgow’s jackets
contain synthetic yard, no further anticorrosive jackets will be
sold for the foreseeable future. Since 1 January 2017 the company
has secured a contract with an Italian company to sell off all
3,000 units of anti-corrosive jackets. Selling prices and delivery
cost per unit of each type of jacket in 2016 and expected prices
and costs for 2017 are as follows:
6. A delivery of 1000 of plain jackets was received into the
warehouse on 2 January 2017. These were ordered on 20 December 2016
and invoiced to Glasgow in 23 December 2016, but they were still in
transit from the Turkish supplier when the inventory count was
carried out on 31 December 2016. The entry Dr Purchases €32,000 and
Cr Trade payables €32,000 was made on 28 December 2016 in respect
of the invoice for these jackets.
Required:
(i) Calculate the value of inventories to be disclosed in the
financial statements of Glasgow as at 31 December 2016 in
accordance with IAS 2 Inventories.
(ii) Explain how the goods in transit at 31 December 2016,
and the associated invoice, described in item 6 above, should be
treated in the accounts for 2016
jackets from a Turkish supplier and then applies either a
waterproof or an anti-corrosive coating to them before selling
them. You are given the following information:
1. The FIFO method of valuation is applied for inventory
valuation purposes.
2. Details of opening inventory and purchases of plain jackets
from the Turkish supplier were as follows during 2016
3. Jackets counted in the warehouse at the inventory count on 31
December 2016 were as follows: Plain jackets 10,000 units
Waterproof 9,000 units Anti-corrosive 3,000 units.
4. As a result of the increase in crude oil prices, the cost of
both the waterproof and anti-corrosive coating increased from 1
October 2016. Since then Glasgow has coated 4,000 units of
waterproof jackets and 2,000 units of the anti-corrosive jackets.
Costs of coating the jackets, per unit, during 2016 were as
follows:
5. From 1 January 2017 new legislation has banned the use of
synthetic yarn in anticorrosive jackets. As Glasgow’s jackets
contain synthetic yard, no further anticorrosive jackets will be
sold for the foreseeable future. Since 1 January 2017 the company
has secured a contract with an Italian company to sell off all
3,000 units of anti-corrosive jackets. Selling prices and delivery
cost per unit of each type of jacket in 2016 and expected prices
and costs for 2017 are as follows:
6. A delivery of 1000 of plain jackets was received into the
warehouse on 2 January 2017. These were ordered on 20 December 2016
and invoiced to Glasgow in 23 December 2016, but they were still in
transit from the Turkish supplier when the inventory count was
carried out on 31 December 2016. The entry Dr Purchases €32,000 and
Cr Trade payables €32,000 was made on 28 December 2016 in respect
of the invoice for these jackets.
Required:
(i) Calculate the value of inventories to be disclosed in the
financial statements of Glasgow as at 31 December 2016 in
accordance with IAS 2 Inventories.
(ii) Explain how the goods in transit at 31 December 2016,
and the associated invoice, described in item 6 above, should be
treated in the accounts for 2016