Ming Limited had the following items of inventory at reporting date: $\begin{array} { l c c c }
\text { Item } & \text { Quantity } & \text { Cost/unit } & \text { NRV/unit } \
& & £ & £ \
\text { Refrigerators } & 10 & 100 & 95 \
\text { Stoves } & 20 & 80 & 85
\end{array}$
The adjustment necessary at reporting date is:
A) DR Inventory £50;
B) DR Inventory £100;
C) CR Inventory £50;
D) CR Inventory £0.

Question

Ming Limited had the following items of inventory at reporting date: $\begin{array} { l c c c } 
\text { Item } & \text { Quantity } & \text { Cost/unit } & \text { NRV/unit } \
& & £ & £ \
\text { Refrigerators } & 10 & 100 & 95 \
\text { Stoves } & 20 & 80 & 85
\end{array}$
The adjustment necessary at reporting date is:
A) DR Inventory £50;
B) DR Inventory £100;
C) CR Inventory £50;
D) CR Inventory £0.

Quizplus · Accepted Answer

The adjustment is needed for the refrigerators, as their NRV is lower than cost. The loss is $ (100 - 95) \times 10 = £50 $. Therefore, CR Inventory £50.

Ming Limited Had the Following Items of Inventory at Reporting