Question

2. The accounting records of Viet Hoa Supermarket in Ho Chi Minh City,

Vietnam, show the following data of its nuoc mam (fish sauce) inventory in

second quarter of 2020. (Currency in Vietnamese đồng, đ; (20%)

Beginning inventory       4,000 units @ đ 300

Purchases                      6,000 units @ đ 400

Sales                              7,000 units @ đ 1,200

Instructions: Determine the cost of goods sold during the period under a periodic

inventory system using (a) the FIFO method and (b) the average-cost

method.

* Use ‘d’ for currency unit if you find it difficult to show ‘đ’ sign.

Answer 1

FIFO method

	Units	Cost	Amount (d)
Beg Inventory	4000	300	1200000
Purchase	3000	400	1200000
Total cost of goods sold	7000		2400000

Weighted average method

average cost was calculated as total value of beginning inventory and purchase / Total units in beginning inventory and purchase

=4000 * d300 + 6000 * d400 / 6000+4000

=1200000d + 2400000 d /10000 = 360

This average cost can then be applied to the 7000 units in sales and would be calculated as 7000 units x d360

Cost of goods sold = d 2520000