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L. Zhou started trading on 1 April 2020 selling soccer shirts The following table shows details of the purchases from the entity's suppliers and sales
L. Zhou started trading on 1 April 2020 selling soccer shirts The following table shows details of the purchases from the entity's suppliers and sales to retailers during the financial year 1 April 2020 31 March 2021. There was no opening balance of soccer shirts at the beginning of the financial year. Unit cost Date Date Number of soccer shirts purchased 01/04/20 250 08/08/20 200 05/02/21 300 10.00 12.00 14.00 Number of soccer shirts sold 200 150 250 25/04/20 06/09/20 10/03/21 5b) Give two possible reasons for the decision taken by L. Zhou to use the First in First out (FIFO) method of valuing closing inventory. When conducting a physical stock check at the end of the financial year on the 31 March 2021, ten soccer shirts were found to be soiled. The soccer shirts were bought at a cost of 14.00 each with a resale value of 30.00. L. Zhou will be able to sell the ten soiled shirts for 10.00 each if he has them cleaned at a cost of 2.00 each shirt
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