Chapter 8

Review Questions
3. Increase in cost of goods sold figure and decrease in profit by $500.
Included Omitted
Sales 5,000 5,000
Less: COGS
COGAS ,000 ,000
Less: !nding In"entory #,500 #,000
COGS $,500 %,000
Gross &rofit $,500 $,000
4. '(e p(ysical stoc)ta)e allo*s an entity to establis( (o* +uc( of in"entory it (as co+pared to
*(at t(e perpetual syste+ states. '(is allo*s losses fro+ t(eft and spoilage to be +easured.
5. If t(e net realisable "alue is less t(an cost t(en to use cost *ould o"erstate t(e future benefits,
on t(e ot(er (and, if it is (ig(er, to include t(e (ig(er figure *ould +ean t(at unrealised
profits *ould be included in t(e profit for t(e period.
Problems
5.
Retail Cost
Sales -0,000 %./,-$%
Opening In"entory $.,00
0 &urc(ases %./,000
1 COGAS 0%,00
2 !nding In"entory 3deri"ed4 $/,..
1 COGS %./,-$%
Sales at retail "alue $-0 000 *(ic( is #%0 per cent of cost, t(erefore cost $-0,0005#.%0 1
$%./,-$%
9 a Snor)el sets
Sold during t(e year $$%,0 5 $60 1 $-%
COGAS during t(e year 1 opening in"entory 0 purc(ases 1 %$6
!nding in"entory 1 COGAS 7 Sales 1 %5
COGAS
$/
0
#00
$/
$
#0-$
./ %
6
$666
#0
$
%
/
%/.$
-6
%
$#
32
8
12906
%# 8ece+ber In"entory
i 9I9O periodic:
%5 snor)el sets at $% eac( 1 $#505
ii LI9O periodic:
$/ snor)el sets at $0 0 - sets at $$ 1 $##6
iii :eig(ted a"erage periodic:
A"erage cost 1 #$ -0/5%$6
1 $%-.%5
!nding in"entory 1 %5 ; $%-.%5
1 $# %...$5
i 9I9O periodic:
S!im!orld
Statement o" comprehensi#e income "or $ear endin% 31 &ecemer 20'0
$ $
Sales
Less
COGS
COGAS
Closing inventory
Cost of goods sold
Gross profit
12906
1 505
23 440
11 401
12 039
ii LI9O periodic:
S!im!orld
Statement o" comprehensi#e income "or $ear endin% 31 &ecemer 20'0
$ $
Sales
Less
COGS
COGAS
Closing inventory
Cost of goods sold
Gross profit
12906
1 41
23 440
114
11 952
iii A"erage cost periodic:
S!im!orld
Statement o" comprehensi#e income "or $ear endin% 31 &ecemer 20'0
$ $
Sales
Less
COGS
COGAS
Closing inventory
Cost of goods sold
Gross profit
12906
1 3!!
23 440
11 529
11 911
C"apter # $nventories and %or& in progress 4