A company has a year-end of 31 December.
Its inventory records on that date showed an inventory of 600 units with a cost of $10 each.
A fire on 31 December had totally destroyed 100 units and caused a further 50 units to be damaged. These would cost $7 each to be repaired.
The inventory records had not been adjusted for the fire. The selling price is $15 per unit.
What is the value of the inventory to be used in the financial statements at 31 December?

Q: What topic does this question test?

This question tests Inventory Valuation in A-Level Accounting (syllabus code 9706). It is worth 1 mark.

Q: Which exam paper is this question from?

This question appeared in the Cambridge A-Level Accounting Feb/Mar 2018 examination, Paper 1 Variant 2 (9706_m18_qp_12.pdf).

Question

A company has a year-end of 31 December.
Its inventory records on that date showed an inventory of 600 units with a cost of $10 each.
A fire on 31 December had totally destroyed 100 units and caused a further 50 units to be damaged. These would cost $7 each to be repaired.
The inventory records had not been adjusted for the fire. The selling price is $15 per unit.
What is the value of the inventory to be used in the financial statements at 31 December?

Oracle Prep · Accepted Answer

The correct answer is C: $4900.

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