Paulson, Inc. has 8 computers which have been part of the inventory for over two years. Each computer cost ₤600 and originally retailed for ₤825. At the statement date, each computer has a net realizable value of ₤350. What value should Paulson, Inc., have for the computers at the end of the year?
A) ₤2,000.
B) ₤2,800.
C) ₤4,800.
D) ₤6,600.

Question

Quizplus · Accepted Answer

The original cost of 8 computers = 8 x ₤600 = ₤4,800.
The original retail value of 8 computers = 8 x ₤825 = ₤6,600.
Since each computer now has a net realizable value of ₤350, the total value of 8 computers = 8 x ₤350 = ₤2,800.
Therefore, the value that Paulson, Inc., should have for the 8 computers at the end of the year is ₤2,800. 
Hence, the correct answer is option B.