Week 6 2019 workshop question.pdf - Department of Accounting and Finance ACF 100 Introduction to Accounting and Finance Michaelmas Term 2019-20 Workshop

Week 6 2019 workshop question.pdf - Department of...

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Department of Accounting and Finance ACF 100: Introduction to Accounting and Finance Michaelmas Term 2019-20 Workshop 6 Week 6 (week commencing 11 th November 2019) Question 1: Accounting for inventory On 1 January 2019, Cardamom Ltd had 4,500 packets of ready-mixed spices in inventory. These had cost £10 each and were paid for in the previous financial year. Cardamom Ltd uses a perpetual inventory system with a first in first out (FIFO) cost flow assumption. It purchases all inventory on credit and sells all its spices to customers on a credit basis. During the year ended 31 December 2019, Cardamom Ltd records the following movements in inventory. 12 February 2019 OUT 3,800 packets sold for £13 each 16 July 2019 IN 1,600 packets costing £11 each 19 October 2019 OUT 1,200 packets sold for £15 each. None of the purchases in the year have been paid for by 31 December 2019 and none of the cash had been received from customers who had bought packets of spices during the year. At the end of the year, 100 packets of spices were found to have been damaged and
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