Palma Putih Bhd began operations in 2020 by selling a single product. Data on purchases for the
Question:
Palma Putih Bhd began operations in 2020 by selling a single product. Data on purchases for the year are as follows:
Purchases
Date | Units Purchased | Unit Cost (RM) | Total Cost (RM) |
| 18 April | 2,300 | 13.00 | 29,900 |
| 9 May | 2,500 | 14.00 | 35,000 |
| 13 June | 2,600 | 14.20 | 36,920 |
| 10 July | 2,300 | 15.00 | 34,500 |
| 16 August | 1,700 | 15.25 | 25,925 |
| 14 October | 800 | 15.50 | 12,400 |
| 12 November | 500 | 15.75 | 7,875 |
| 9 December | 500 | 17.00 | 8,500 |
On 5 January 2021, the president of the company, Mr. Haikal, reported 5,000 units physical inventory from stock count that was taken on 31 December 2020. Other financial information for Palma Putih Bhd for the year ended 31 December 2020 are as follows:
Detail Information | RM |
| Total sales | 362,500 |
| Sales discount and allowance | 12,000 |
| Salaries and wages expenses | 48,000 |
| Distribution costs | 22,000 |
| Administrative costs | 39,000 |
| Finance costs | 3,000 |
| Other expenses | 3,500 |
| Taxation | 36,000 |
REQUIRED:
(a) Determine the cost of inventory under the periodic system using First-In, First-Out (FIFO) method as at 31 December 2020.
(b) Determine the net profit for the year under ended 2020.
(c) Palma Putih Bhd plans to expand its product line. Therefore, the president asked for your advice on the use of a perpetual inventory system in the future. Discuss TWO (2) advantages and TWO(2) disadvantages of using a perpetual inventory system.
Expert Answer:
a Cost of Ending inventory as per FIFO on December 31 2020 77200 Working notes Periodic FIFO Currenc... View the full answer
