9706 QR Dynamic Papers Accounting al Cambridge

1 A company calculates factory profit at a mark up of 20% on the cost of production. The following information is available.

	$
inventory of finished goods at cost at 31 December 2013	30 000
cost of goods produced for the year to 31 December 2014	240000
closing inventory of finished goods at cost plus factory profit at	54 000
31 December 2014

How was the change in the provision for unrealised profit shown in the income statement for the year ended 31 December 2014?

A $3000 expense

B $3000 income

C $4000 expense

D $4000 income