Question

how might i show a change from 60 days worth of inventory to 30 days worth in this financial statement? The goal is to show how it affects the year end notes payable, but what numbers would i change?

-2.0 Clipboard UPDATES AVAILABLE Updates for Office are ready to be installed, but first we need to does X f o C501047 048-049 B C D E LMNOPI Depreciation (4) 0.9 0.9 0.9 0.9 1.0 10.7 Interest Expense (5) 0.6 0.4 20.3 Profit Before Taxes -28 17.2 Income Taxes 0.3 -0.5 -0.4 -0. 8 5 .2 Net Profit 0.6 -1.2 12.0 Dividend Mar-12 Apr-12 May 12 Jun 12 Jul-12 Aug-12 Sep-12 Oct-12 Nov.12 Dec-12 Cash 75 7.5 7.5 7.5 7.5 7.5 7.5 7.5 Accounts Receivable (6) 50.1 103.0 179.9 2475 256.9 171. 9 90.0 62.9 50.3 37.1 Inventory 34.511 45. 1 80.5 140.6 .198.411 218. 7166. 790. 2 60. 9 51,5 406 38.4 44.3 Total Current Assets 68. 8 80,3 120. 9 1982 308.9 406.1 421.7 3546 240.3 149.0 1110 96. 2 889 Gross PPE (7) 100.9 1009 100.9 1044 1044 1044 107.9 107.9 107.9 111.4 1114 1114 1149 5 Accumulated Depreciation 14. 8 15.6 16.5 174 11 18 2 |||| 19.1||||20.0120. 9 21. 8 22.7 23.6 24. 6 25.5 3 Net PPE 86. 1 85.3 84.4 || 87.0186.2 85. 3 87. 9 87.0 86.1 88.7 87.8 86.8 89.4 Total Assets 2852 395. 0 4914 509,6 4416 326.4 237.7 198.7 183.0 178.3 Accounts Payable (8) 8.2 12.2 242 38.2 48.4 44.9 23.6 13.8 12. 2 9 .7 76 9.4 9.9 Note Payable (9) 8.0 17.1 472 119.11 215. 7 3079 3454 278.4 163.9 86.9 51.8 36.1 38.6 1 Accrued Taxes (10) -0.9 -1.7 -2.4 -2.6 11-1.7 0. 6 0 .0 2.6 2.9 0.0 -0.4 -1.1 -1.9 2 Total Current Liabilities 2623 353.3 369.0 2949 179.0 96.6 58.6 44.4 46.6 3 Shareholders' Equity (11) 139.6 137.9 136.2 130.6 132.7 138.1 1:40.6 146,8 1474 141.1 140.1 138.6 131.6 4 Total Liabilities and Equity 154.9 1656 2053 285.2 395.0 491 4 509. 6 4416 3264 237.7 198,7 183,0 1783 7.5 - Inventory Detail 7 Purchases (12) 18 Direct Labor and Other Mftg Costs (13) 39 Cost of Goods Sold 50 Inventory (14) 52 Notes: 53 (1) Gross Sales Exercise Tax Rate Title Page Exhibit 1 Exhibit 2 Nov-11 Dec 11 Jan-12 Feb-12 Mar 12 Apr 12 144 15.9 24.5 484 764 96.7 4.9 5.4 83 16.5 1911213113281 649 34.5 45. 1 80.5 1406 198, 4 May 12 Jun 12 89.7 47. 2 32.9 30.5 1023 129.6 218. 7 166. 7 Jul 12 Aug-12 Sep-12 Oct 12 Nov 12 Dec 12 27.7124.5 19.4 15.2 18.7 19.9 16.0 9.4 8.3 6.6 5. 2 6 ,4 120.2 63. 2 37.1 32.8 26.0 204 90.2 60.9 51.5 40.6 38.4 44.3 -03 508.2 171.4 Exhibits Exhibit 6 Type here to search

Answer 1

In computing the Inventory of January 2012, the Balance Inventory of previous two months (i,e 60 days), being November and December have also been included.

The way, the current computation is being made:

Particulars	Nov-11	Dec-11	Jan-12	Feb-12
Opening Stock (current opening is previous periods closing)	0	14.4	34.5	45.1
(+) Purchases	14.4	15.9	24.5	48.4
(+) Direct Labour and other Manuf costs	0	4.9	5.4	8.3
(-) Cost of Goods Sold	0	0	19.3	21.3
Closing Stock	14.4	34.5	45.1	80.5

The requirement now is to consider a 30 day base (i.e one month of previous inventory only)
Therefore, the way the computation should be is as follows:

	Particulars	Nov-11	Dec-11	Jan-12	Feb-12	Mar-12	Apr-12	May-12	Jun-12	Jul-12	Aug-12	Sep-12	Oct-12	Nov-12	Dec-12
(i)	Opening Stock (current opening is previous periods closing)	0	14.4	20.8	29.9	56.7	92.9	122.7	122.6	70.7
(ii)	(+) Purchases	14.4	15.9	24.5	48.4	76.4	96.7	89.7	47.2	27.7	24.5	19.4	15.2	18.7	19.9
(iii)	(+) Direct Labour and other Manuf costs	0	4.9	5.4	8.3	16.5	26	32.9	30.5	16	9.4	8.3	6.6	5.2	6.4
(iv)	(-) Cost of Goods Sold (first utilised from opening stock)	0	0	19.3	21.3	32.8	64.9	102.3	129.6	120.2	63.2	37.1	32.8	26	20.4
	Closing Stock (only current months unused can be carried forward)	14.4	20.8	29.9	56.7	92.9	122.7	122.6	70.7	-5.8	-29.3	-9.4	-11.0	-2.1	5.9
			[ (ii)+ (iii) ]	[ (ii)+ (iii) ]	[ (ii)+ (iii) ]	[ (ii)+ (iii) ]	[ (ii)+ (iii) ]	[ (ii)+ (iii) ]	[ (i) + (ii)+ (iii)-(iv) ]	[ (i) + (ii)+ (iii)-(iv) ]	[ (ii)+ (iii)-(iv) ]	[ (ii)+ (iii)-(iv) ]	[ (ii)+ (iii)-(iv) ]	[ (ii)+ (iii)-(iv) ]	[ (ii)+ (iii)-(iv) ]
									Note 1	Note 2	Note 3	Note 3	Note 3	Note 3
	Wastage		14.4	1.5	8.6	23.9	28.0	20.4	0
			[ (i)-(iv) ]	[ (i)-(iv) ]	[ (i)-(iv) ]	[ (i)-(iv) ]	[ (i)-(iv) ]	[ (i)-(iv) ]
	Note 1: Entire opening stock carried forward from May '12 is required to be used to meet the current months demand
	Note 2: Entire opening stock carried forward from June '12 is required to be used to meet the current months demand
	Note 3: As previous months closing inventory was negative, there is no opening stock in the current month
	Therefore, from the above computation it is clear that, in case if only a 30 day inventory holding is considered, the purchases in the months of July to Nov will have to be increased.
	Further, There will be wastage of inventory through the months of Jan to May
	The final Closing Inventory as of December of only 5.4 as compared to 44.3 when the 60 days computation was adopted.