Bafu Ltd., a private limited company, manufactures a wide range of bathroom fittings. These fittings are made from steel components which are chromed in small vats. The steel components are sourced from outside suppliers. The year end stock mainly consists of these steel components and finished items. As at 31 October 2004, the total stock was valued at Sh. 6,048,000 out of total assets of Sh. 19,200,000. This stock figure was obtained by a physical count as at 31 October 2004, and valuation by reference to purchase invoices and manufacturing cost estimates. Required: With reference to each of the matters listed below, state the work you would do to conclude whether the amount attributed to stock is fairly stated;Condition of stock items

Condition of Stock Item
• Verify that stock whose value is given is in good condition i.e. there are no defects of any sort.
• Ensure that items identified as damaged or obsolete during the count have been treated as such.
• Obtain details of damaged/obsolete stock and the extent of damage as taken during the stock take.



Share through

Leave a Reply

Your email address will not be published.