Mr. DIY, a retail store in Malaysia has the following inventory records for March 2022: 

Operating expenses incurred for March 2022 was $2,700. The company total revenue generated for the month of March 2022 was $8,000.

 Required: 

a) Prepare the March 2022 income statement to show the amounts for first-in-first-out (FIFO) and weighted average cost for the following inventory management systems: i) Periodic inventory system  ii) Perpetual inventory system 

b) Prepare the ‘bottom line’ operating profits for the two inventory management approaches in a) i) and ii). You are required to show your calculations for the cost of goods sold (COGS)

 c) Explain the inventory management system that would result in lower gross profit in times of rising prices of the consumer’s general basket of goods and services.

Answer rating: 100% (QA)

We will prepare the income statement for Mr DIY for March 2022 using the periodic inventory system and perpetual inventory system for both FIFO and weighted average cost methods Assuming that the comp... View the full answer