XY Ltd’s sells T-shirts. It uses the periodic inventory system. It’s inventory at the beginning of the month June and all purchases during the month of June 2019 are provided as below. Ignore GST. Units Total cost ($) 1/6 Beginning inventory 1050 18,900 10/6 Purchase 750 14,175 15/6 Purchase 450 8,910 23/6 Purchase 750 15,750 Totals 3,000 $57,735 A physical count on 30 June verified that 975 units were on hand. Required: a) Determine the Ending inventory and Cost of Sales for the month of June, using the FIFO costing method. b) If all inventories are sold in the same price of $50, prepare the relevant part of the income statement for the month of June. c) Would you recommend the Perpetual Inventory System to the management of XY Ltd? Explain the reason for your recommendation.
XY Ltd’s sells T-shirts. It uses the periodic inventory system. It’s inventory at the beginning of the month June and all purchases during the month of June 2019 are provided as below. Ignore GST. Units Total cost ($) 1/6 Beginning inventory 1050 18,900 10/6 Purchase 750 14,175 15/6 Purchase 450 8,910 23/6 Purchase 750 15,750 Totals 3,000 $57,735 A physical count on 30 June verified that 975 units were on hand. Required: a) Determine the Ending inventory and Cost of Sales for the month of June, using the FIFO costing method. b) If all inventories are sold in the same price of $50, prepare the relevant part of the income statement for the month of June. c) Would you recommend the Perpetual Inventory System to the management of XY Ltd? Explain the reason for your recommendation.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter7: Inventories: Cost Measurement And Flow Assumptions
Section: Chapter Questions
Problem 11RE: Jessie Stores uses the periodic system of calculating inventory. The following information is...
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XY Ltd’s sells T-shirts. It uses the periodic inventory system. It’s inventory at the beginning of the month June and all purchases during the month of June 2019 are provided as below. Ignore GST.
| Units | Total cost ($) | ||
| 1/6 | Beginning inventory | 1050 | 18,900 |
| 10/6 | Purchase | 750 | 14,175 |
| 15/6 | Purchase | 450 | 8,910 |
| 23/6 | Purchase | 750 | 15,750 |
| Totals | 3,000 | $57,735 |
A physical count on 30 June verified that 975 units were on hand.
Required:
a) Determine the Ending inventory and Cost of Sales for the month of June, using the FIFO costing method.
b) If all inventories are sold in the same price of $50, prepare the relevant part of the income statement for the month of June.
c) Would you recommend the Perpetual Inventory System to the management of XY Ltd? Explain the reason for your recommendation.
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