The purchases and sales of Big Flower Pty Ltd of one brand of lawn fertiliser for the year ended 31 December 2019 are contained in the schedule below.

The selling price up to 30 June was $12 per unit but was raised to $14 for the rest of the year.

Ignore GST.

Required

(a) Prepare the income statement up to the gross profit stage under the following cost flow assumptions:
1. periodic inventory i. FIFO ii. weighted average 2. perpetual inventory i. FIFO ii. moving average.

(b) If 10 of the units sold on 9 October were returned and placed back into inventory, how would this affect profits calculated under requirements (a)2(i) and (a)2(ii) above?

(c) If 5 of the units purchased on 11 December were returned to the supplier, how would this affect profits calculated under requirements (a)2(i) and (a)2(ii) above?

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Purchases Sales Balance Unit Unit Unit Date Units cost Total Units cost Total Units cost Total Jan. 1 80 $5.00 $400 7 40 40 30 Feb. 2 20 gg 50 $5.10 $255 27 27 60 5.20 312 28 50 Mar. 16 25 24 30 20 5.20 130 5.30 159 27 20 Apr. 7 23 15 40 40 5.35 214 18 50 May 4 30 5.30 159 June 2 20 5.40 108 26 40 40 July 27 30 30 5.40 162 Aug. 6 50 31 Sept. 11 60 60 5.50 330 20 26 40 Oct. 9 Nov. 4 40 40 40 5.50 220 60 828 5.60 224 30 30 Dec. 11 20 5.65 113 27 10 10