PinkCow Ltd sells PinkCow energy drink cans to customers.

PinkCow Ltd sells PinkCow energy drink cans to customers. The following relates to PinkCow Ltd’s activities during June 2020: June 1 Opening inventory 50,000 cans — cost $2 each 9 5,000 cans purchased at a cost of $2.50 each 17 40,000 cans purchased at a cost of $2.50 each 23 10,000 cans purchased at a cost of $2.60 each 31 Closing inventory (as per physical stock take) 20,000 cans. Additional information i. The most recent selling price of the PinkCow can is $4.60 per can. ii. One thousand cans of the closing inventory have been dented and can only be sold for $1 per can. iii. Freight from the supplier to PinkCow Ltd costs $0.50 per can. Freight from PinkCow Ltd to supermarkets costs $0.60 per can and would also apply to the cans with dents. PinkCow Ltd pays both sets of freight costs. iv. PinkCow Ltd uses the periodic inventory system and applies the weighted average cost (WAC) method.

Required:

(a) Calculate the value of total closing inventory at 30 June 2020 as provided for in AASB 102. Justify all assumptions and calculations.

(b) Prepare the necessary journal entries to record the inventory write-down. Narrations are NOT required.