QUIZ – ACCOUNTING FOR
INVENTORIES
(PERIODIC SYSTEM)
Syarikat
Noah has prepared an inventory record for the month of January 2023 as follows:
The company uses Periodic Inventory System.
Required:
i. Calculate
the ending inventory cost and cost of goods sold using the following methods:
a.
First
In First Out (FIFO)
b.
Last
In First Out (LIFO)
c. Weighted
Average (round-off to TWO decimal point)
ii. Based on the answer in (i),
calculate the total gross profit.
iii. Assuming you are the accountant
of Syarikat
Noah, suggest the
inventory evaluation method that the company can achieve to:
b.
Report highest profit.
ANSWER
i. Ending
Inventory (units) = Beginning
Inventory + Purchase – Sales
= 10 + (60 +
150 + 90) – (70 + 20 +30)
= 310 – 120
= 190 units
Cost of
ending inventory :
90 x RM10 = RM
900
100 x RM10 =
RM1,000
190 =
RM1,900
Cost of
Goods Sold = Beginning inventory +
Purchase – Ending inventory
= 80 + (540
+ 1,500 + 900) – 1,900
= 3,020 –
1,900
= RM1,120
b. LIFO
Cost of ending inventory :
10 x RM8 =
RM 80
60 x RM9 =
RM 540
120 x RM10 = RM1,200
190 = RM1,820
Cost of Goods Sold = Beginning inventory + Purchase – Ending inventory
=
80 + (540 + 1,500 + 900) – 1,820
=
3,020 – 1,820
=
RM1,200
c. WEIGHTED AVERAGE
Weighted Average Cost per unit = Cost of goods available for sale
Units available for sale
= 80 + (540 + 1,500 + 900)
10
+ (60 + 150 + 90)
= RM3,020
310 unit
= RM 9.74
Cost of ending inventory = RM 9.74 x 190
= RM 1,850.60
Cost of Goods Sold = Beginning inventory + Purchase – Ending inventory
=
80 + (540 + 1,500 + 900) – 1,820
=
3,020 – 1,850.60
=
RM1,169.40
ii.
|
FIFO
|
LIFO |
WEIGHTED AVERAGE
|
SALES
(1,400 + 440 + 750)
|
2,590 |
2,590 |
2,590 |
(-) COST OF GOOD SOLD
|
(1,120) |
(1,200) |
(1,169.40) |
GROSS PROFIT
|
1,470 |
1,390 |
1,420.60 |
iii.
a. Minimize tax - LIFO
b. Report highest profit - FIFO