Question

The following transactions took place in Prince$$s Sales Limited during the year ended December $31,2023$:

Purchase #$1$

Purchase #$2$

Purchase #$3$

Purchase #$46,000$ units @ $$2\mathrm{.}50$

$4,000$ units @ $$3\mathrm{.}00$

$2,000$ units @ $$1\mathrm{.}00$

$3,000$ units @ $$0\mathrm{.}50$

There was no opening inventory. On December $31,2023,12,000$ units were sold for $$4$ each.

For specific identification purposes, the items sold were:

$5,000$ units of purchase #$1$

$2,000$ units of purchase #$2$

$2,000$ units of purchase #$3$

$3,000$ units of purchase #$4$

Required:

$1.$ Calculate the cost of ending inventory under each of the following costing methods:

a$.$ FIFO

b$.$ Specific identification

c$.$ Weighted average

$2.$ Complete the following calculations:

FIFO Spec. Ident. Wtd$.$ Avg.

Sales

Cost of goods sold

Gross profit

$3.$ In a period of rising prices, does FIFO or weighted average costing produce the lowest net income?