Question

These are the inventory transactions for a start up business.

Date	Type	Units	Unit Cost
01/07/17	Purchase	100	50
15/07/17	Sale	40
31/07/17	Purchase	25	60
15/08/17	Sale	70

Do not use punctuation in numerical answers.

Calculate Cost of Goods Sold using periodic average cost: Answer

Calculate Closing inventory using periodic FIFO: Answer

B)

Given:

Please note this information is used for the next three questions.

Do not use punctuation or symbols in your answers.

Opening Inventory	44476
Net Purchases	144205
Net Sales Revenue	202699
Gross Profit Margin	26%

Calculate Gross Profit (rounded to the nearest dollar - then use the rounded amount in any further calculations)

Answer:

Calculate Cost of Goods Sold

Answer:

Calculate Closing Inventory

Answer:

Answer 1

(A)

Calculation of cost of goods sold using periodic average cost

Periodic average cost = (50 + 60)/2

= 55

Total 110 units were sold

Hence cost of goods sold = 110 x 55

= 6050

Calculation of closing inventory as per periodic FIFO

Total 110 (40 + 70) units were sold.

Cost of inventory sold will be calculated as under:

40 units @ 50

60 units @ 50

10 units @ 60

Hence closing inventory consists of 15 units purchased on 31/07/2017 at a cost of 60 each.

Closing inventory = 15 x 60

= 900

(B)

Opening inventory = 44476

Net purchases = 144205

Net sales revenue = 202699

Gross profit margin = 26%

Gross profit = 202699 x 26%

= 52702

Cost of goods sold = Net sales revenue - Gross profit

= 202699 - 52702

= 149997

Cost of goods sold = Opening inventory + Net purchases - Closing inventory

149997 = 44476 + 144205 - Closing inventory

Closing inventory = 188681 - 149997

= 38684