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
300 units at $300 each on credit from D-Sign Light.
100 units at list price of $350 each less 10% discount, paid by cheque.
250 units at $290 each on credit from Sun-Joy.
3. Sales of inventory in the month were
400 units for cash at $560 each.
400 units at $540 each on credit to Home Interior.
a. Explain the concept of First-In-First-Out.
b. Prepare the inventory account for the month of July.
c. Calculate, showing working, the gross profit for the month of July 2020.