Suppose that the 9,000 tonnes of inventories in Example3.8 were sold for 15 a tonne. (a)Calculate the

Question:

Suppose that the 9,000 tonnes of inventories in Example3.8 were sold for £15 a tonne.

(a) Calculate the gross profit for the period under each of the three costing assumptions.

(b) What do you note about the different profit and closing inventories valuations when using each method, when prices are rising?

Data from Example 3.8

A business commenced on 1 May to supply oil to factories. During the first month, the following transactions took place:

May 2 Purchased May 10 Purchased May 18 Sold Tonnes 10,000 20,000 9,000 Cost per tonne 10 13

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Accounting And Finance For Non Specialists

ISBN: 9781292334691

12th Edition

Authors: Peter Atrill, Eddie McLaney

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Question Posted: Dec 24, 2023 05:40 AM

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Complete the table below, for the above transactions

Suppose that the 9,000 tonnes of inventories in Example3.8 were sold for 15 a tonne. (a)Calculate the

Question:

May 2 Purchased May 10 Purchased May 18 Sold Tonnes 10,000 20,000 9,000 Cost per tonne £10 £13

Step by Step Answer:

a Gross profit calculation b These figures show that FIFO will give the highest gross profit dur...View the full answer

Accounting And Finance For Non Specialists

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