Reference no: EM133078249

Question - Three Arrows Limited ('THA') uses the perpetual inventory system and the weighted average costing method. Below is THA's record of inventory purchases and sales for the month of October 20X1.

Date	Description	Units	Units cost ($)	Unit sale price ($)
1 Oct	Beginning inventory	130	50
5 Oct	Purchases	104	59
9 Oct	Sales	110		85
12 Oct	Sales	64		90
16 Oct	Purchases	140	64
25 Oct	Sales	85		80
30 Oct	Sales	80		95

Required -

1. Calculate the sales revenue, cost of goods sold, and gross profit of THA for October 20X1.

2. Calculate the ending inventory of October 20X1 if THA used the FIFO costing method instead.

3. Discuss whether and briefly explain why the cost of goods sold and ending inventory of October 20X1 would be higher or lower if THA used the LIFO costing method instead.