ACCT1501 S2 2012 Solutions to Practice Questions Instalment 2
QUESTION 1 (15 MARKS) INVENTORYPart A (7 marks) In terms of inventory valuation and profit determination, and the associated assumptions about inventory flow, outline the differences between FIFO and LIFO. The details below are more for your understanding - students would not be expected to provide such a comprehensive answer in the exam.
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Part B (8 marks) A company has the following details in its stock records: 1stJuly, 500 units of product X on hand, valued at $5,000 in total. 10thJuly, 250 units of X purchased at $16 per unit. 12thJuly, 200 units of X sold. 15thJuly, 200 units of X purchased at $19.20 per unit. 20thJuly, 300 units of X purchased at $17.50 per unit. 24thJuly, 500 units of X sold. Compute the cost of goods sold during the month of July and the valuation attributed to the inventory at the 31stJuly using the Weighted Average Method.
$
Total
9,000
6,600
10,440
15,690
8,217

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