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CBA Ltd sells smartphones. The following information relates to its best-selling mod the month of January 2022. Jan 1 Beginning inventory of 10 units at $300 per unit

CBA Ltd sells smartphones. The following information relates to its best-selling mod the month of January 2022. Jan 1 Beginning inventory of 10 units at $300 per unit

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Please provide detailed answers for C). Ignore A and B.

 
Sales : 15,400
Calculated COGS in Jan 2020 : 12,750 (using FIFO)
Ending inventory balance : 13,850
 
 
 
CBA Ltd sells smartphones. The following information relates to its best-selling model Tex for the month of January 2022. Beginning inventory of 10 units at $300 per unit Purchased 30 units at $280 per unit Purchased 20 units at $270 per unit Sold 10 units at $350 per unit Purchased 50 units at $245 per unit Returned 10 units purchased on Jan 20 Sold 35 units at $340 per unit Jan 1 Jan 5 Jan 8 Jan 10 Jan 20 Jan 21 Jan 25 The company uses the perpetual inventory system and FIFO method to account for its inventories. (a) Present the cost of goods sold for the month ending January 2022 and ending inventory cost on 31 January 2022. You have to show the inventory movements and balance for each transaction. The company is considering weighted-average method to account the inventories. Explain without computations whether FIFO method or weighted-average method will give a higher gross profit for January 2022. You have to discuss both methods in your (b) answer. Due to some defects, it is estimated that the remaining inventories at end of January 2022 can be sold for only $230 each (assumes no selling costs). Compute the new ending inventory cost on 31 January 2022 and new gross profit for January 2022. (c)
Transcribed Image Text:CBA Ltd sells smartphones. The following information relates to its best-selling model Tex for the month of January 2022. Beginning inventory of 10 units at $300 per unit Purchased 30 units at $280 per unit Purchased 20 units at $270 per unit Sold 10 units at $350 per unit Purchased 50 units at $245 per unit Returned 10 units purchased on Jan 20 Sold 35 units at $340 per unit Jan 1 Jan 5 Jan 8 Jan 10 Jan 20 Jan 21 Jan 25 The company uses the perpetual inventory system and FIFO method to account for its inventories. (a) Present the cost of goods sold for the month ending January 2022 and ending inventory cost on 31 January 2022. You have to show the inventory movements and balance for each transaction. The company is considering weighted-average method to account the inventories. Explain without computations whether FIFO method or weighted-average method will give a higher gross profit for January 2022. You have to discuss both methods in your (b) answer. Due to some defects, it is estimated that the remaining inventories at end of January 2022 can be sold for only $230 each (assumes no selling costs). Compute the new ending inventory cost on 31 January 2022 and new gross profit for January 2022. (c)
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