Question

In: Accounting

Using the inventory flow assumptions of weighted average, LIFO and FIFO calculate the inventory and cost of goods sold for an organisation with the following transactions

Part 1

Using the inventory flow assumptions of weighted average, LIFO and FIFO calculate the inventory and cost of goods sold for an organisation with the following transactions and records and use the information to develop an inventory report/ comparison report. Present your calculations and any relevant assumptions in a report format suited to the financial services industry.

The organisation’s records show the inventory and the purchases to be:

Opening inventory

350 units @ $25

Purchases

December 1

300 units @ $30


February 17

500 units @ $28


April 21

250 units @ $35


June 6

300 units @ $35

The organisation has an opening inventory of 350 units and a closing inventory of 650. Sales figures for the period were $108 000.

Part 2

a. Describe the procedures you would follow in a work organisation, to determine and confirm work requirements, in particular those relevant to this task.

b. Make a verbal presentation of the inventory report/ comparison report you developed, to demonstrate your communication skills. Use language and concepts appropriate to cultural differences and demonstrate your ability to share information that is clear, concise and accurate. You can use Power Point slides, charts or any other presentation aids you require and you might choose to record your presentation.

Submit the report, the presentation notes and any visual aids you used.

Under periodic inventory


Solutions

Expert Solution

Units Unit cost Total cost
Opening inventory 350 25 8750
Purchases
1-Dec 300 30 9000
17-Feb 500 28 14000
21-Apr 250 35 8750
6-Jun 300 35 10500
1700 Total cost 51000
Periodic Method
No. of units sold
Opening Inventory+purchases-closing inventory
350+1350-650 1050
Weighed Average
cost per unit 30
51000/1700
Cost of good sold 31500 ans
1050*30
LIFO
Cost of good sold 33250
Units Unit cost Total cost
17-Feb 500 28 14000
21-Apr 250 35 8750
6-Jun 300 35 10500
1050 33250
FIFO
Cost of good sold 28950
Units Unit cost Total cost
Opening inventory 350 25 8750
Purchases
1-Dec 300 30 9000
17-Feb 400 28 11200
1050 28950
a) weighted avg LIFO FIFO
Sales 108000 108000 108000
Less: COGS 31500 33250 28950
Gross profit 76500 74750 79050
When the prices are rising of the goods purchased than
the highest income is under FIFO as the inventory purchased first
is sold first. LIFO has lowest profit in case of rising prices as the goods
purchased last are sold first. Weighted average is between LIFO and FIFO
Verabal presentation cannot be provided.
But the above data is helpful in making verbal presentation

ekkarill92 answered 2 years ago
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