BINA Enterprise has approached you to get some advice on the inventory system. The company provides vape and beginning the year 2020, the company starts selling vape to customers. The manager of Bina Enterprise, Mr. Jack shows the data on vape for the month of May 2020:

Sales of vape: 2000 units Beginning inventory: 500 units @ RM4 Purchases, in chronological order: 600 units @ RM5 800 units @ RM6 500 units @ RM8

1. Advise Mr. jack which inventory system (perpetual vs periodic) and inventory cost flow assumptions (FIFO vs Average) should be adopted by BINA Enterprise. In this regard you’re supposed to compare FIFO and Average Cost methods, and give some illustrations of the net income under the FIFO and Average Cost

2. Which cost flow assumption should be used if Mr. Jack would like to reduce the income tax for the year 2020?

Answer rating: 100% (QA)

1 Under perpetual inventory system inventory records are updated after every purchase saleso that is... View the full answer