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5 marksMaterial Control and Inventory Valuation

CAPE Accounting Unit 2 · 2009 · Paper 2 · Question 1(b)(i)a)

Ajani Water Sports Company purchased and sold surfboards during 2008 with purchases totaling 100 units at various unit costs. 40 surfboards remained in inventory on December 31, 2008, and the average selling price was $320 per surfboard. The company uses a periodic inventory system.

Calculate ending inventory, cost of goods sold, and gross profit under the First-in-First-out (FIFO) inventory valuation method.

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Other parts of this question

  1. 1(a)Classify each cost item (2 to 11) as being either a product (inventoriable) cost or a period (non-inventoriable) cost, using the provided table format.[5 marks]
  2. 1(b)(i)b)Calculate ending inventory, cost of goods sold, and gross profit under the Last-in-First-out (LIFO) inventory valuation method.[5 marks]
  3. 1(b)(i)c)Calculate ending inventory, cost of goods sold, and gross profit under the Weighted average inventory valuation method.[4 marks]
  4. 1(b)(ii)Indicate which of the valuation methods is the most appropriate if management's goal is to produce the most up-to-date inventory valuation on the Balance Sheet.[1 mark]
  5. 1(c)(i)Prepare a Cost of Goods Manufactured Statement for 2008.[10 marks]
  6. 1(c)(ii)Prepare an Income Statement for 2008.[5 marks]

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