Reference no: EM132563508

Bendigo Pottery Ltd is a wholesale distributor of hand-made glazed garden pots to retail stores. All garden pots are identical. Details for January 2020 are shown below.

January

1 Opening inventory 2,000 pots - cost $39 each

8 Sales 1,200 pots - selling price $80 each

9 Purchases 1,600 pots - purchase price $44 each

28 Sales 1,800 pots - selling price $84 each

31 Closing inventory 600 pots from the stock stake

Additional information:

i. Freight costs from the supplier to the Bendigo Pottery Ltd.'s warehouse is $4 for each garden pot.

ii. One hundred and eighty (180) of the garden pots on hand at 31 January have imperfections in the glazing and can only be sold for $30 each after handling and repackaging of $10 for each pot.

iii The latest selling price of the garden pots is $84 each.

iv. Bendigo Pottery Ltd prepares monthly reports and applies the periodic (physical) and the weighted average cost (WAC) method.

Question 1: Calculate the value of total closing inventory at 31 January 2020 as provided for in AASB 102. Justify all assumptions and calculations.

Question 2: Prepare the general journal entry at 31 January 2020 for any inventory write down.