was $133.) PSA4.2 Journalise purchase and sale transactions under a perpetual inventory system. LO2, 3 The Novelty Bookstore distributes hardback books to retail stores and extends credit terms of 2/7, n/30 to all of its customers. During the month of June the following inventory transactions occurred. June 2 Purchased 130 books on account for $6 each from Reader's World Publishers, terms 1/7, n/30. Also made a cash payment to Classic Couriers of $60 for the freight on this date. 3 Sold 140 books on account to the Book Nook for $12 each. 6 10 books returned to Reader's World Publishers. Received $60 credit. 9 Paid Reader's World Publishers the amount owing. 15 Received payment from the Book Nook. 17 Sold 120 books on account to Read-A-Lot Bookstore for $12 each. 20 Purchased 120 books on account for $6 each from Read More Publishers, terms 2/7, n/30. 24 Received payment of account from Read-A-Lot Bookstore. 26 Paid Read More Publishers the amount owing. 28 Sold 110 books on account to Readers Bookstore for $12 each. 30 Granted Readers Bookstore $180 credit for 15 books returned costing $90. The books were returned into inventory. Required (a) Journalise the transactions for the month of June for The Novelty Bookstore, using a perpetual inventory system. Assume the cost of each book sold was $6. (b) What are the advantages and disadvantages for The Novelty Bookstore of using a perpetual inventory system as opposed to a periodic system? E5.7 Calculate inventory and cost of sales using FIFO, LIFO and average cost. Fenning Pty Ltd reports the following for the month of June: Required Date June 1 Explanation Units Inventory 200 Unit cost $10 12 Purchases 300 12 Total cost $2000 3600 23 Purchases 500 14 7000 30 Inventory 180 LO5 (a) Calculate cost of the ending inventory and the cost of sales under (1) FIFO, (2) LIFO and (3) average cost. (b) Which costing method gives the highest ending inventory and the highest cost of sales? Why? (c) How do the average cost values for ending inventory and cost of sales compare with ending inventory and cost of sales for FIFO and LIFO? (d) Explain why the average cost is not $12.