Wheels Down Ltd. is a distributor of commercial grade wheelbarrows to local greenhouses. The company uses a perpetual inventory system. They calculate inventory values by applying average cost and reports under ASPE.

Wheels Down Ltd. had 200 units at $70 each in its inventory on March 31, 2021. Details of purchases and sales for the month of April 2021 are shown below:

Date		Units	Unit Cost	Selling Price
April 5	Purchase	200	$75
April 12	Sale	360		$140
April 18	Purchase	300	$80
April 27	Sale	310		$140

Note: All sales and purchases are made on account. Round all calculations to two decimals.

Required:

1. Calculate the ending inventory (in units and dollars) and the total cost of goods sold for the month of April 2021. Show all calculations. (7 marks)
2. Prepare the required journal entry(ies) for the sale on April 12. (2 marks)
3. When the physical count was completed on April 30, 2021, there were only 29 wheelbarrows on hand in the warehouse. Record the entry, if any, the company should prepare to record the discrepancy. (2 marks)
4. If the company used First In First Out (FIFO) instead of average cost, would the April 2021 total Cost of Goods Sold be higher or lower? Explain. (No calculations are necessary). (1 mark)
5. Which method (Average cost or FIFO) would result in a higher gross profit for the month of April 2021? (Calculations are not required.) (1 mark)
6. What is one guideline that Wheels Down Ltd. should consider when deciding between Average cost and FIFO for its inventory formula? (1 mark)