Half-way Reality check - ACCT10002 Reality Check half-way...

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ACCT10002: ‘Reality Check” half-way through Semester 1, 2017Selected questions from exam paper: Semester 1, 2016QUESTION THREE 11 MARKS(a)The following data are available for Rachel’s Hair Accessories Pty. Ltd. at 31 December.CostNet Realisable ValueLCNRVSilk ribbons$25 200$21 420Gold-plated hair clips18 80019 950Crystal hair jewels29 40026 880Required:(i) Using the above table, calculate and indicate the lower of cost and net realisable value for Rachel’s Hair Accessories total inventory
(1 mark)(ii) Why is it important to account for inventory using the lower of cost or net realisable value basis?(2 marks)(b) Delta Ltd sells many products. Alpha is one of its popular items. Below is an analysis of the inventory purchases and sales of Alpha for the month of March. Date PurchasesSalesUnits Unit Cost UnitsSale price/unitMar 1Beginning inventory100$603Purchase60$754Sales70$12010Purchase200$8216Sales80$13019Sales80$13025Sales50$13030Purchase40$90Instructions:(i)Using the FIFO assumption, calculate the amount recorded in the cost of sales for March.(Show computations and record to the nearest whole dollar)(4 marks)(ii)

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