Fountain Ltd started a business on 1 December 2020 trading in office water coolers e month to 31 December 2020 the following transactions occurred: Tonnes Unit cost Purchases Qty £ 01-Dec 18 22 09-Dec 24 20-Dec 10 27 Sales Tonnes Sell price 11-Dec 20 30 22-Dec 11 32

Fountain Ltd started a business on 1 December 2020 trading in office water coolers e month to 31 December 2020 the following transactions occurred: Tonnes Unit cost Purchases Qty £ 01-Dec 18 22 09-Dec 24 20-Dec 10 27 Sales Tonnes Sell price 11-Dec 20 30 22-Dec 11 32

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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Question

5. Fountain Ltd started a business on 1 December 2020 trading in office water coolers. In
the month to 31 December 2020 the following transactions occurred:
Tonnes
Unit cost
Purchases
Qty
£
01-Dec
18
22
09-Dec
7
24
20-Dec
10
27
Sales
Tonnes
Sell price
11-Dec
20
30
22-Dec
11
32
Required:
a) Calculate the gross profit for December 2020 and the value of closing inventory on
31 December 2020 using FIFO and AVCO.
b) Briefly describe the following inventory valuation methods:
i.
FIFO
ii.
LIFO
ii.
AVCO

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