Apex Manufacturing Enterprise recorded the following closing inventory balances at the end… — JAMB UTME

Apex Manufacturing Enterprise recorded the following closing inventory balances at the end of its trading period:
- Raw materials inventory: $\text{₦}15{}000$
- Work-in-progress inventory: $\text{₦}10{}000$
- Finished goods inventory: $\text{₦}25{}000$

A provision for unrealized profit of $\text{₦}2{}500$ was created on the finished goods inventory.

What is the total value of manufacturing inventories (in $\text{₦}$ ) to be presented under current assets in the statement of financial position?

Cevap: 47500 ₦

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The total value of manufacturing inventories presented under current assets in the statement of financial position is ₦47,500.

Manufacturing inventories listed under current assets in the statement of financial position consist of raw materials, work-in-progress, and finished goods reduced by any provision for unrealized profit. Deducting the ₦2,500 provision from ₦25,000 finished goods gives ₦22,500. Adding raw materials (₦15,000) and work-in-progress (₦10,000) results in a total inventory valuation of ₦47,500.

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Deduct the provision for unrealized profit from the finished goods inventory

Net Finished Goods Inventory = ₦25,000 - ₦2,500 = ₦22,500

The provision for unrealized profit must be deducted from finished goods to ensure inventory is presented at original cost to the entity.

Sum all three manufacturing inventory categories

Total Inventory = ₦15,000 (Raw Materials) + ₦10,000 (WIP) + ₦22,500 (Net Finished Goods) = ₦47,500

Manufacturing inventories presented under current assets comprise raw materials, work-in-progress, and net finished goods.

Anahtar Kavram

Balance Sheet Presentation of Manufacturing Inventories and Provision for Unrealized Profit

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