2020 PHS 3E POA EOY P1 Q3
3 Martin, who sells designer lamp shades follows First-In-First-Out inventory management. The following were extracted for the month of July 2020.
1. Inventory on hand comprised 400 units of lamp shades costing $280 each.
2. Purchases of inventory in the month were
Jul 12 | 300 units at $300 each on credit from D-Sign Light. |
20 | 100 units at list price of $350 each less 10% discount, paid by cheque. |
27 | 250 units at $290 each on credit from Sun-Joy. |
3. Sales of inventory in the month were
Jul 13 | 400 units for cash at $560 each. |
28 | 400 units at $540 each on credit to Home Interior. |
REQUIRED
a. Explain the concept of First-In-First-Out.
[1]
b. Prepare the inventory account for the month of July.
[6]
c. Calculate, showing working, the gross profit for the month of July 2020.
[2]
[TOTAL 9]