Call Now: (+61) 416-195-006
Question 2
GGG Pty Ltd in accordance with organisational policy, procedures and practices uses a periodic inventory system and values its inventory using FIFO. GGG had the following records during the month of September:
| Date | Description | Units | Unit Cost | Total Cost |
| Sept 1 | Beginning inventory | 5,000 | $2.00 | $10,000 |
| Sept 13 | Inventory purchased | 8,000 | $2.40 | $19,200 |
| Sept 21 | Inventory purchased | 7,000 | $2.60 | $18,200 |
| Total | 20,000 | $47,400 |
GGG sold 14,000 units during the month.
Required:
Calculate inventory on 30th September and COGS for the month using each of the following inventory costing methods:
- FIFO method (show your workings):
- Weighted average cost method, if this was to be used (show your workings):
- Which method of inventory valuation has generated the lowest COGS for the month and what is the difference in COGS between the two inventory valuation methods? (show your workings):
- If GGG Pty Ltd were to use a weighted average cost method, what would be the discrepancy for the closing inventory compared to the amount had FIFO been used instead to value closing inventory? (show your workings):
- What cost method for valuing inventory do GGG Pty Ltd require as per their organisational policy, procedures and practices?
- What journal entry would be required to adjust both COGS and closing inventory if the weighted average cost method had been used but GGG Pty Ltd require the COGS and closing inventory values to be changed to reflect the use of FIFO as the cost method?
Our Academic Assistance: service is all about doing research and being good at it. The more research one will do, the better the paper will turn out.
Expert's Answer
Chat with our Experts
Want to contact us directly? No Problem. We are always here for you
