Determining inventories cost and cost of sales (periodic method)

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

1. The cost of inventories on hand at 1 January 2025 was \(\$ 40000\) and at 31 December 2025 was \(\$ 35000\). Inventories purchases for the year amounted to \(\$ 170000\), freight outwards expense was \(\$ 1500\), and purchase returns were \(\$ 1400\). What was the cost of sales for the year ended 31 December 2025?

(a) \(\$ 163600\)

(b) \(\$ 173600\)

(c) \(\$ 175000\)

(d) \(\$ 175100\)

2. The following inventories information an entity that uses a periodic method and rounds the average unit cost to the nearest dollar.

What is the cost of ending inventories using the weighted average costing formula?

(a) \(\$ 550\)

(b) \(\$ 580\)

(c) \(\$ 587.50\)

(d) \(\$ 600\)

Transcribed Image Text:

Beginning inventories January purchase July purchase October purchase Ending inventories 5 units @average cost of $25 each = $125 10 units @ $24 each 30 units @ $25 each 15 units @ $22 each 25 units -