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The following information relates to the inventory of Scarf Ltd during the month of October 2019. Ignore GST.
| | | Units | Units cost ($) | Total cost ($) |
| 1 Oct | Beginning inventory | 2,100 | 11 | 23,100 |
| 10 Oct | Purchase | 1,500 | 11.6 | 17,400 |
| 15 Oct | Purchase | 900 | 12.2 | 10,980 |
| 23 Oct | Purchase | 1,500 | 13 | 19,500 |
| | Totals | 6,000 | | $70,980 |
Scarf Ltd uses the Periodic Inventory System. A physical count on 31 October verified that 1900 units were on hand.
Required:
- Determine the Ending inventory and Cost of Sales for the month of October, using the FIFO costing method. (3 marks)
- Discuss the differences between Perpetual and Periodic Inventory systems. (3 marks)
- Would you recommend the Perpetual Inventory System to the management of Scarf Ltd? Explain. (2 marks)
Answer & Explanation
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