The purchases and sales of Big Flower Pty Ltd of one brand of lawn fertiliser for the year ended 31 December 2016 are contained in the schedule on the next page.

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

                  (a)  FIFO

                  (b)  weighted average

            2.   perpetual inventory

                  (a)  FIFO

                  (b)  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 A2(a) and A2(b) above?

C. If 5 of the units purchased on 11 December were returned to the supplier, how would this affect profits calculated under A 2(a) and A 2(b) above?