70.2K

Verified Solution

Link Copied!

2.A) TESCO is a British multinational groceries and general merchandise retailer with headquarters in Welwyn Garden City, Hertfordshire, England, United Kingdom. It is the third-largest retailer in the world measured by gross revenues. It has shops in seven countries across Asia and Europe. It is the market leader of groceries in the UK, Ireland, Hungary, and Thailand. It provides the following purchases and sales of Merchandise Inventory for the month of June 2018: Unit Price 20 Date Details June 2 Purchases June 5 Purchases June 9 Purchases June 15 Purchases June 22 Purchases Total Purchases Units 600 400 200 600 1,000 2,800 OMR 12,000 12.000 6,800 24.000 25,000 79,800 Details Units Unit Price 60 600 Date June 7 Sales June 17 Sales June 25 Sales Total Sales 80 500 200 1,300 OMR 36,000 40,000 9,000 85,000 Company follows Perpetual Inventory System. All purchases and sales are on credit basis. You are required to identify necessary journal entries for the above purchase and sales of Merchandise Inventory under FIFO method. 2.B) The Muscat Drugs company provides the following data from the records of the company: 2019 sale (at an average price of OMR 30 a unit) were OMR 4,500,000 2019 purchases (at an average cost of OMR 20 a unit) were OMR 2,400,000 The company uses the LIFO Inventory Method and has used it since 2005. During 2019, Muscat Drugs company experienced significant increase in the rate of gross profit on sales compared with the rate it has averaged in recent years. You are asked to determine the most likely reason for this improvement. Justify

Answer & Explanation Solved by verified expert

See Answer