Bendigo Pottery Ltd is a wholesale distributor of hand-made glazed garden pots to retail stores.All garden pots are identical.Details for January 2020 are shown below.

January

1

Opening inventory

2,000 pots - cost $39 each

8

Sales

1,200 pots - selling price $80 each

9

Purchases

1,600 pots - purchase price $44 each

28

Sales

1,800 pots - selling price $84 each

31

Closing inventory

600 pots from the stock stake

Additional information:

i.Freight costs from the supplier to the Bendigo Pottery Ltd.'s warehouse is $4 for each garden pot.

ii.

iii.One hundred and eighty (180) of the garden pots on hand at 31 January have imperfections in the glazing and can only be sold for $30 each after handling and repackaging of $10 for each pot.

iv.The latest selling price of the garden pots is $84 each.

v.Bendigo Pottery Ltd prepares monthly reports and applies the periodic (physical) and the weighted average cost (WAC) method.

(a)Briefly explain why Bendigo Pottery Ltd uses the weighted average cost flow method for its glazed garden pots.

(b)Calculate the value of total closing inventory at 31 January 2020 as provided for in AASB 102.Justify all assumptions and calculations.

(c)Prepare the general journal entry at 31 January 2020 for any inventory write down.