Abrian Agric Ltd supplies seeds to farmers, and has the following transactions during a period:

Tons Cost/ton £ 1 May Opening Inventories 100 100 2 May Purchases 500 110 3 May Purchases 800 120 1,400 6 May Sales (900) Closing Inventories 500

If the selling price is £150 per ton, show the following: 

a) Cost of sales

 b) Closing inventories value

 c) Gross profit figures using First in first out (FIFO), Last in first out (LIFO), and Average cost (AVCO). 

d) What observations concerning the portrayal of financial position and performance can you make about each method when prices are rising?

Answer rating: 100% (QA)

SOLUTION a Cost of sales can be calculated as the cost of opening inventory plus the cost of purchases minus the cost of closing inventory Cost of ope... View the full answer