Compute the gross profit for june assuming telelink ltd

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Reference no: EM132321763

Question 1: Inventories

Inventories and purchases for the month of June for Telelink Ltd are as follows:

 

Units

Per Unit

Total

Inventory, 1 June

1,000

$10

$10,000

Purchase, 3 June

10,000

11

110,000

Purchase, 15 June

5,000

12

60.000

Purchase, 20 June

4,000

15

60,000

Inventory, 30 June

6,000

-

-

Telelink Ltd uses the periodic inventory system. Units sell at $20 each.

Required: For the purpose of this question, please ignore GST. Show all your workings.

(i) Compute the gross profit for June assuming Telelink Ltd uses the FIFO method of costing stock.

(ii) Compute the gross profit for June assuming Telelink Ltd uses the weighted average method of costing stock.

Question 2

On 18 July, the warehouse storing the inventory of PRAN Ltd was destroyed by a fire. The insurance company asked the managing director to prove his inventory loss. Available records indicated the following:

Sales up to 18 July

$1,082,000

Sales returns up to 18 July

60,000

Beginning inventory

320,000

Purchase

926,800

Purchases returns

22,000

Gross profit margin

35%

Required: For the purpose of this question, please ignore GST. Show all your workings. Determine the amount PRAN Ltd can claim for the inventory loss.

Reference no: EM132321763

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