5 Inventories and purchases for the month of June for Glow L

5. Inventories and purchases for the month of June for Glow Light Ltd are as follows: Cost per unit Total $162000 161 500 260000 325500 Date Units 9000 8500 13000 15500 18000 Detail June1 3 15 20 30 Inventory Purchase Purchase Purchase Inventory $18 19 20 21 Required Determine the cost of sales for the month under each of the following cost flow assumptions, based on the periodic inventory system: (14 marks) a. FIFO (7 marks) b. weighted average. (7 marks).

Solution

As Per FIFO Method

Calculation of Closing Stock

cost of closing inventory will be (15500*21+2500*20=$375500)

Cost of Good sold = Opening Stock+Purchases-Closing Stock

Therefore $(162000+747000-375500)=$533500

Cost of Sales as per Weighted Average Method

Total cost of all purchases or beginning inventory ($162000+$161500+$260000+$325500=$909000)

Total numbers of Unit (9000+8500+13000+15500=46000)

Average cost of inventory = $909000/46000=$19.76(approx)

closing Stock =18000*19.76=$355695

cost of Goods Sold = $162000+$161500+$260000+$325500-$355680 = $553305