Assigning cost (perpetual method)

Select the correct answer. Show any workings required and provide reasons to justify your choice.

Alice Ltd uses the perpetual method. Alice Ltd's inventories transactions for May 2026 were as follows.

1. What is the value of inventory at the end of May assuming inventory is valued on a FIFO basis?

(a) \(\$ 32.00\)

(b) \(\$ 33.28\)

(c) \(\$ 34.08\)

(d) \(\$ 36.80\)
2. What is the value of inventory immediately before the sales made on the 20th May, assuming inventory is valued on a FIFO basis?

a) \(\$ 186.50\)

b) \(\$ 191.60\)

c) \(\$ 194.00\)

d) \(\$ 207.00\)
3. Assuming that the FIFO cost formula is used, what is the unit cost of the sales returns on 28th May?

(a) \(\$ 4.00\)

(b) \(\$ 4.16\)

(c) \(\$ 4.26\)

(d) \(\$ 4.60\)
4. Assuming that Alice Ltd uses the moving weighted average cost formula, what is the unit cost of the sales returns on 28th May?

(a) \(\$ 4.00\)

(b) \(\$ 4.16\)

(c) \(\$ 4.26\)

(d) \(\$ 4.60\)

Transcribed Image Text:

No. Unit cost Total cost May. 1 Beginning inventories 20 $4.00 $80.00 7 Purchases 10 $4.20 $42.00 10 Purchases 20 $4.30 $86.00 12 Sales 15 ? ? 16 Purchases 10 $4.60 $46.00 20 Sales 40 ? ? 28 Sales returns 3 ? ?