Question 2 (9 marks)

The following information relates to China CDs. China CDs uses the periodic inventory system to account for its inventory. The following information relates to the three-month period ending 31 March 2016. At 1 January 2016 beginning inventory was 1,000 CDs with an average cost price of $4 each.

		Units purchased	Total cost of purchases $	Units sold	Total sales $
January	Sales			800	8,000
	Purchases	800	3,600
February	Sales			750	8,500
	Purchases	1,200	6,000
March	Sales	____	____	1,100	11,200
		2,000 units	$9,600	2,650 units	$27,700

A physical stocktake counted 350 CDs on hand on 31 March 2016.

Required:

Using the periodic system, calculate the cost of the inventory of CDs on hand at 31 March 2016 using:

1. the weighted average method (3 marks)

ANSWER:

2. the first-in-first-out (FIFO) method, (3 marks)

ANSWER:

3. how would sales be recorded differently between periodic and perpetual system? (3 marks)

ANSWER: