XY Ltd’s sells T-shirts. It uses the periodic inventory system. It’s inventory at the beginning of the month June and all purchases during the month of June 2019 are provided as below. Ignore GST. Units Total cost ($) 1/6 Beginning inventory 1050 18,900 10/6 Purchase 750 14,175 15/6 Purchase 450 8,910 23/6 Purchase 750 15,750 Totals 3,000 $57,735 A physical count on 30 June verified that 975 units were on hand. Required: a) Determine the Ending inventory and Cost of Sales for the month of June, using the FIFO costing method. b) If all inventories are sold in the same price of $50, prepare the relevant part of the income statement for the month of June. c) Would you recommend the Perpetual Inventory System to the management of XY Ltd? Explain the reason for your recommendation.
XY Ltd’s sells T-shirts. It uses the periodic inventory system. It’s inventory at the beginning of the month June and all purchases during the month of June 2019 are provided as below. Ignore GST. Units Total cost ($) 1/6 Beginning inventory 1050 18,900 10/6 Purchase 750 14,175 15/6 Purchase 450 8,910 23/6 Purchase 750 15,750 Totals 3,000 $57,735 A physical count on 30 June verified that 975 units were on hand. Required: a) Determine the Ending inventory and Cost of Sales for the month of June, using the FIFO costing method. b) If all inventories are sold in the same price of $50, prepare the relevant part of the income statement for the month of June. c) Would you recommend the Perpetual Inventory System to the management of XY Ltd? Explain the reason for your recommendation.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Topic Video
Question
XY Ltd’s sells T-shirts. It uses the periodic inventory system. It’s inventory at the beginning of the month June and all purchases during the month of June 2019 are provided as below. Ignore GST.
| Units | Total cost ($) | ||
| 1/6 | Beginning inventory | 1050 | 18,900 |
| 10/6 | Purchase | 750 | 14,175 |
| 15/6 | Purchase | 450 | 8,910 |
| 23/6 | Purchase | 750 | 15,750 |
| Totals | 3,000 | $57,735 |
A physical count on 30 June verified that 975 units were on hand.
Required:
a) Determine the Ending inventory and Cost of Sales for the month of June, using the FIFO costing method.
b) If all inventories are sold in the same price of $50, prepare the relevant part of the income statement for the month of June.
c) Would you recommend the Perpetual Inventory System to the management of XY Ltd? Explain the reason for your recommendation.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education