* Question 1 You are provided with the following information for Vaughn Pushers.

Question

* Question 1 You are provided with the following information for Vaughn Pushers. Vaughn Pushers uses the periodic method of ??counting for its inventory transactions. March 1 Deginning inventory 2,882 liters at a cost of £0.70 per liter March 3 Purchased 3,275 liters at a cost of £0.75 per liter March 5Sold 2,882 liters for E1.15 per iter March 10 Purchased 5,240 liters at a cost of 0.82 per liter March 20 Purchased 3,275 liters at a cost of £0.90 per liter March 30 Sold 7,205 liters at a cost of E1.35 per Iiter Question 1 Prepare partial income stotements through gross profit, and calculate the value of ending inventory that would be reported on the statement of financial position, under each of the following assumptions. (Round per unit cost to 3 decimal places, e.g. 15.125 and final answers to 2 decimal places, e.g.125.86.) (The March 5 sale conaisted of 1,441 liters from tha March 1 baginning inventory and 1,441 liters from the March 3 purchase; and (The March 30 sale consisted of the following number of units sold from beginning inventory and each purchase: 590 liters from March 1; 1,114 liters from March 3; 3,799 liters from March 10; 1,702 lters from March 20. (2) FIFO (3) Average-cost. VAUGHN PUSHERS Income Statement (partial)

Explanation / Answer

Solution :

Specific identification method:

Cost of goods sold = (1441*0.70) + (1441*0.75) + (590*0.70) + (1114*0.75) + (3799*0.82) + (1702*0.90)

= 7,984.93 pound

Value of ending inventory = 11717.95 - 7984.93 = 3733.02 pound

FIFO:

Qty in ending inventory = Total qty available - Qty sold = 14672 - 10087 = 4585 litre

Under FIFO Ending inventory will consist of 3275 ltr from march 20 purchase and 1310 ltr from march 10 purchase

Value of ending inventory = (3275 * 0.90) + (1310*0.82) = 4,021.70 pound

Cost of good sold = 11717.95 - 4021.70 = 7696.25 pound

Average Cost method:

Average cost per litre = 11717.95 / 14672 = 0.79866 per litre

Value of ending inventory = 4585 * 0.79866 = 3,661.85 pound

Cost of goods sold = 11717.95 - 3,661.85 = 8056.10 pound

Computation of Cost of goods available for sale Date Qty purchase / Opening Qty Rate Purchase Cost 1-Mar 2882 £0.70 £2,017.40 3-Mar 3275 £0.75 £2,456.25 10-Mar 5240 £0.82 £4,296.80 20-Mar 3275 £0.90 £2,947.50 Total 14672 £11,717.95

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