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Question - Your friend Amos is running a trading business. His company did not use the perpetual inventory system and he is considering whether he should switch to perpetual inventory system. He showed you the purchases and sales for his company in the last six months (Assume beginning inventory is zero).
Units Unit Cost Purchases
1 January 400 @ $2,370
8 February 500 @ $2,350
10 March 600 @ $2,370
1 May 200 @ $2,380
15 June 200 @ $2,360
Sales -
January 200
February 210
March 210
April 220
May 180
June 210
Using the above information, explain to Amos why he should use perpetual inventory system for his business.
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