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The accounting division of XYZ Merchandising International has the following inventory details for the year ending 2020. XYZ sells each unit for $55 and updates
The accounting division of XYZ Merchandising International has the following inventory details for the year ending 2020. XYZ sells each unit for $55 and updates inventory records periodically.
Period | Inventory | No of units | Unit cost |
1st January | Opening balance | 100 | 30 |
20th February | Purchase | 400 | 35 |
15th March | Sold | 150 |
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2nd May | Purchase | 300 | 38 |
30th July | Sold | 200 |
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20th November | Sold | 120 |
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- Under the weighted average cost method, what are the reported cost of sales, gross profit, and ending inventory balances for 2020?
(2.5 marks)
- Under the FIFO method, what are the reported cost of sales, gross profit, and ending inventory balances for 2020?
(1.5 marks)
- Under the LIFO method, what are the reported cost of sales, gross profit, and ending inventory balances for 2020?
(1.5 marks)
- Compare the cost of sales, the ending inventory, the cost of goods available, and gross profit calculated under each valuation method.
(1.5 marks)
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