Goods with a selling price of 12 500 (cost 10 000, based on Mr Reedy's 25% mark-up on cost) were sent to a customer on a sale or return basis before the year end. The customer had not yet indicated whether he would keep the goods. How should these goods be treated in the seller's closing inventory at the year end?

Included in the seller's inventory at cost, because ownership and the risks of the goods have not yet passed to the customer.

Unused stationery costing $3 500 had mistakenly been included in the physical count of trading inventory at 10 April 2016. How should this amount be treated when calculating the correct trading inventory figure?

Deducted from the trading inventory figure, because stationery is not goods held for resale.

Closing inventory is valued at the most recent purchase prices, giving a more realistic figure in the statement of financial position.

A Level Accounting

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