Question $1$ Reporting and analysing inventories $(20$ Marks$)$

$1\mathrm{.}1$ How does Woolworths value its inventory? Explain $(2$ Marks$)$

$1\mathrm{.}2$ Compare the closing inventory days $($compared to cost of sales$)$ for $2019$ and $2020.$ Discuss if Woolworths

has improved its efficiency in managing inventory in $2020.(6$ Marks$)$

$1\mathrm{.}3$ Assume Woolworths hold $100000$ rolls of toilet paper that cost $$2$ per roll on $1$ July $2020.$ During July,

Woolworths bought and sold toilet paper as follows

Jul$-03$ Sold $90000$ rolls for $$4$ each

Jul$-16$ Purchased $100000$ rolls at $$3$ each, the price is rising due to the panic purchase of

Jul$-23$ Sold $100000$ rolls for $$5$ each

Required

Show the calculations of gross profit for Woolworths store using FIFO, LIFO and average cost.

Show your workings. Analyse which method gives the most gross profit. $(12$ Marks$)$