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Question:Harrow Co sells one line of inventory. At the year-end it has 200 units in inventory which originally cost $10 per unit and had incurred delivery costs of $120 in total.
They expect these goods to sell for $13 per unit. Harrow Co incurs selling costs amounting to 10% of the selling price on all its sales.
In the statement of financial position these items should be valued at:
A. $2,600
B. $2,080
C. $2,120
D. $2,000
The correct answer is: $2,120.
Total cost of inventory = Cost/unit ($10.60) x 200 units = $2,120.
Total net realisable value = net realisable value per unit ($13 x 90% = $11.70) x 200 units = $2,340.
Hence the inventory (200 units) will be valued at cost.
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