Financial Reporting Analysis
Question 3
Quantity | Unit Cost | Selling Price/unit | Selling Cost/unit | ||||
Material A | 3,000 | $10 | $8 | $2 | |||
Material B | 3,500 | $14 | $18 | $3 | |||
Material C | 3,900 | $27 | $28 | $5 | |||
Material D | 1,500 | $15 | $19 | $4 |
Cost of purchases (based on vendors' invoices) 600,000
Trade discounts on purchases 90,000
Import duties 13,500
Freight and insurance on purchases 26,500
Other handling costs relating to imports 12,150
Salaries of accounting department 95,000
Brokerage commission payable to agents for arranging imports 15,000
Sales commission payable to sales agents 14,100
Cost of security for warehouse 43,000
i. In keeping with IAS 2, determine the items that can be classified as inventory and calculate total cost of inventory.
ii. For any items that are not inventory, how should these be recorded in the financial
statements?