Answer Happy

With all the new inventory Tom is going to have, he wants to be sure he is tracking and valueing it correctly. He again will look to you for recommendations on how to do so, and wants to get this sorted out before his new machine arrives. The information he has provided is based on current operations and so only includes the purchase and sale of inventory [not manufacturing]. Explain the pros & cons of both FIFO and Weighted Average costing, calculate what the difference in ending inventory and cost of sales between the two would be and recommend 1 to Tom: Units Value Date Opening Inventory value: Cost/Unit 75 $ Event 15-Jan-22 Purchase 20-Jan-22 Sale [$150 each] 04-Feb-22 Purchase 10-Feb-22 Sale [$175 each] 08-Mar-22 Purchase 25-Mar-22 Sale [$145 each] 200 $ 20 $ 50 $ 50.00 75.00 45.00 65.00 Required 3B) Tom is too busy with all the changes to his business to record the above listed transactions and is hoping you can prepare them based on whichever costing method you recommended [FIFO or Weighted Average]. Prepare Journal entries for all the transactions listed above - assume all sales and purchases are on account: