Question

Mahmood company needed 3,700 units of raw material every month starting from January till
June due to the orders which it has received from a customer and also to satisfy the regular
demand the company has.The company started to place its order with different suppliers as it was
not able to find a single supplier to satisfy all its needs. They have to procure the raw materials
from different suppliers at the prevailing market price. In the month of January and February,
they purchased at the rate of RO12.25 per unit and RO.12.40 per unit respectively. Due to high
demand for raw materials in March, they have to pay RO.12.70 per unit. But the prices in April
and May was less when compared with March which stood at RO 12.5 per unit and RO 12.55 per
unit respectively. In June, the company has bought the raw materials at RO 12.65 per unit. All
the raw materials purchased are converted in to finished goods in that particular month itself. In
order to convert the raw materials purchased to finished goods, the company has to spend an
additional cost of 250 baiza for each unit. However, the company already had 3,200 units of
older stock that was purchased at RO 10 each (additional cost for manufacturing is included).
The company sold 4,100 units @ RO 14.5 per unit in February, 4,800 units @ RO15.75 per unit
in April and in June 5,268 units @ RO16.25 per unit. The company follows LIFO method of
inventory valuation.

You are required to calculate ending inventory for the above transactions.

You are required to prepare Journal entries for the above Question using
perpetual and periodic inventory system.

Note: provide the answer in text format only

Answer 1