Question 7 (5 marks)

Lounge Pty Ltd uses the periodic inventory method and had the following inventory information available for the month of December:

Units Unit Cost Total Cost

1 Dec Opening Inventory 100 $4 $ 400

15 Dec Purchase 500 $5 2,500

18 Dec Purchase 100 $7 700

20 Dec Purchase 300 $8 2,400

1,000 $6,000

A physical count of inventory on 31 December revealed that there were 250 units on hand.

Required:

Answer the following independent questions and show all calculations to support your answer.

Type your answer in the template provided.

[Answer and show workings here]

1. Assume that the company uses the LIFO method. What is the value of the ending inventory at 31 December? (2 marks)

2. Assume that the company uses the average cost method. What is the value of the ending inventory on 31 December ? (2 marks)

3. Assume that the company uses the LIFO method. What is the value of the cost of sales at 31 December ? (3 marks)