Page 61 - Accountancy_F5

Example 2.6
The following information relates to the inventory of Shaija as at 31 June 2022
st
Articles Different Costs Net Realisable Value
categories TZS TZS
1 A 2,500 2,000
FOR ONLINE READING ONLY
2 A 3,000 3,750

3 A 7,500 10,000
4 B 4,500 4,250
5 B 3,750 3,250
LANGUAGE EDITING
6 B 6,500 5,250
7 C 10,250 13,500
8 C 9,000 10,250
9 C 10,500 7,750
TOTAL 57,500 60,000
Required: Calculate the value of inventory to be incorporated in the financial
statement using category method.

Solution 2.6

Costs NRV
Category
TZS TZS
A 2,500 + 3,000 + 7,500 = 13,000 2,000 + 3,750 + 10,000 = 15,750
B 4,500 + 3,750 + 6,500 = 14,750 4,250 + 3,250 + 5,250 = 12,750
C 10,250 + 9,000 + 10,500 = 29,750 13,500 + 10,250 + 7,750 = 31,500

The lower cost and NRV is then:
Category A = TZS 13,000
Category B = TZS 12,750
Category C = TZS 29,750
The value of inventory = 13,000 + 12,750 + 29,750 = TZS 55,500

Example 2.7
Use the information provided in example 2.7, to calculate the value of inventory to be
incorporated in the financial statement using article method.

Student’s Book Form Five
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