1. Which inventory costing method does Ron use? Explain it.2. What is the Cost of Goods Sold for the 15th July Transaction (as indicated by the question mark above)?3. Describe the effect that an increase in inventory purchase prices will have on Gross profit and ending inventory values under the FIFO, LIFO and Weighted Average valuation methods. Ron's Tennis Ball Shop sells tennis balls to the general public.Ron uses the Perpetual System to track his Inventory of tennis balls.Below is the completed Inventory Record for tennis balls, for July 2021.PRODUCT: Tennis balls (cost price)BALANCE (inshop)of tennis balls15 @ $2 each15 @ $2 each300 @ $2.5 each280 @ $2.5 eachDATEINOUT20201st July3rd July300 @ $2.5 each7th July15 @ $2 each20 @ $2.5 each10th July400 @ $3 each280 @ $2.5 each400 @ $3 each360 @ $3 each15th July19th July300 @ $3 each60 @ $3 each

The inventory can be valued using various methods as LIFO, FIFO and average method.

Answered: Ron's Tennis Ball Shop sells tennis…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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1. Which inventory costing method does Ron use? Explain it.

2. What is the Cost of Goods Sold for the 15th July Transaction (as indicated by the question mark above)?

3. Describe the effect that an increase in inventory purchase prices will have on Gross profit and ending inventory values under the FIFO, LIFO and Weighted Average valuation methods.

Ron's Tennis Ball Shop sells tennis balls to the general public.
Ron uses the Perpetual System to track his Inventory of tennis balls.
Below is the completed Inventory Record for tennis balls, for July 2021.
PRODUCT: Tennis balls (cost price)
BALANCE (in
shop)
of tennis balls
15 @ $2 each
15 @ $2 each
300 @ $2.5 each
280 @ $2.5 each
DATE
IN
OUT
2020
1st July
3rd July
300 @ $2.5 each
7th July
15 @ $2 each
20 @ $2.5 each
10th July
400 @ $3 each
280 @ $2.5 each
400 @ $3 each
360 @ $3 each
15th July
19th July
300 @ $3 each
60 @ $3 each

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