The following information has been extracted from the records of Steven’s Stationery about one of its popular products. Steven’s Stationery uses the perpetual inventory system. The end of the reporting period is 31 December. Ignore GST.

Required

(a) Calculate the cost of inventory on hand at 31 December 2019 and the cost of sales for the year ended 31 December 2019, assuming:

i. the FIFO cost flow assumption 

ii. the moving average cost flow assumption (round average unit costs to the nearest cent, and total cost amounts to the nearest dollar).

(b) Prepare the income statement to gross profit for the year ended 31 December 2019, assuming:

i. the FIFO cost flow assumption 

ii. the moving average cost flow assumption.

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No. of units Unit cost 2019 Jan. 1 Beginning balance 900 $7.00 6 Purchases 400 7.05 Feb. 5 March 17 April 24 May 4 Sales@$12.00 per unit Purchases Purchases returns Sales @$12.10 per unit 1000 1100 7.35 80 7.35 700 June 26 Purchases 8400 7.50 Aug. 11 Sales @ $13.25 per unit 1800 19 Sales returns @ $13.25 per unit 20 Sept. 11 Sales @ $13.50 per unit 3500 Oct. Dec. 11 6 Purchases Sales @ $15.00 per unit 500 3100 8.00