Exercise 9.8 ★ ★ ALLOCATING COST (WEIGHTED AVERAGE), REPORTING GROSS PROFIT AND APPLYING THE NRV RULE Oslo Ltd wholesales bicycles. It uses the perpetual inventory method and allocates cost to inventory on a moving average basis. The company’s reporting period ends on 31 March. At 1 March 2014, inventory on hand consisted of 350 bicycles at $82 each and 43 bicycles at $85 each. During the month ended 31 March 2014, the following inventory transactions took place (all purchase and sales transactions are on credit): March 1 Sold 300 bicycles for $120 each. 3 Five bicycles were returned by a customer. They had originally cost $82 each and were sold for $120 each. 9 Purchased 55 bicycles at $91 each. 10 Purchased 76 bicycles at $96 each. 15 Sold 86 bicycles for $135 each. 17 Returned one damaged bicycle to the supplier. This bicycle had been purchased on 9 March. 22 Sold 60 bicycles for $125 each. 26 Purchased 72 bicycles at $98 each. 29 Two bicycles, sold on 22 March, were returned by a customer. The bicycles were badly damaged so it was decided to write them off. They had originally cost $91 each. Required 1. Calculate the cost of inventory on hand at 31 March 2014 and the cost of sales for the month of March. (Round the average unit cost to the nearest cent, and round the total cost amounts to the nearest dollar.)

2. Show the Inventory general ledger control account (in T-format) as it would appear at 31 March 2014. 3. Calculate the gross profi t on sales for the month of March 2014.