Question

Transactions for the month of June were:

                                   Purchases                                                       Sales                

                         June 1       (balance) 2,200 @ $3.00                   June 2         900 @ $5.50

                                  3                        3,300 @   3.20                            6      2,400 @   5.50

                                  7                        1,800 @   3.30                            9      1,500 @   5.50

                                15                        2,700 @   3.50                          10         600 @   6.00

                                22                           750 @   3.80                          18      2,100 @   6.00

                                                                                                              25         300 @   6.00

3. Assuming that perpetual inventory records are kept, the ending inventory and COGS on a FIFO basis would be (in $)

4. Assuming periodic FIFO – what is ending inventory and COGS (in $)

5. Assuming periodic weighted average – what is ending inventory and COGS (in $)

Answer 1

Ans 1 Perpetual inventory System: In this system, the cost of sales and invenries are updated on every sales and purchase transactions. First in, first out method (FIFO): In this method it is assumed that inventory which is purchased first will be sold first and the inventory will consist of later purchases. Perpetual Purchase Cost of Good Sold Perpetual FIFO Ending inventory-Perpetual FIFO FIFO No of Unit Cost Per Unit Total Cost No of Unit Cost Per Unit Total Cost No of Unit Cost Per Unit Total Cost June 1 2200 $3.00 $6,600 June 2 900 $3.00 $2,700 1300 $3.00 $3,900 June 3 3300 $3.20 $10,560 1300 $3.00 $3,900 3300 $3.20 $10,560 4600 $14,460 June 6 1300 $3.00 $3,900 2200 $3.20 $7,040 1100 $3.20 $3,520 2400 $7,420 2200 $7,040 June 7 1800 $3.30 $5,940 2200 $3.20 $7,040 1800 $3.30 $5,940 4000 $12,980 June 9 1500 $3.20 $4,800 700 $3.20 $2,240 18001 $3.30 $5,940 1500 $4,800 2500 $8,180 June 10 600 $3.20 $1,920 100 $3.20 $320 1800 $3.30 $5,940 600 $1,920 1900 $6,260

June 15 2700 $3.50 $9,450 100 1800 2700 4600 2500 $3.20 $3.30 $3.50 $320 $5,940 $9,450 $15,710 $8,750 June 18 $3.50 100 1800 200 2100 $3.20 $3.30 $3.50 $320 $5,940 $700 $6,960 June 22 750 W3.OUT $3.80 $2,850 $3.50 $3.80 2500 2500 750 3250 2200 750 2950 $8,750 $8,750 $2,850 $11,600 $7,700 $2,850 $10,550 June 25 300 $3.50 $1,050 $3.50 $3.80 300 7800 $1,050 $24,850 8550 $28,800 Total inventory Cost 2950 $10,550 Cost of Good Sold Ending Inventory $24,850 $10,550

Ans 2 Periodic inventory System: In this system, the cost of sales and inventory are determined as the end of the accounting period. First in, first out method (FIFO): In this method it is assumed that inventory which is purchased first will be sold first and the inventory will consist of recent purchases. Cost of Goods Sold Ending inventory Date Unit Rate Amount Date Unit Rate Amount June 1 2,200 $3.00 $6,600 June 15 2,200 $3.50 $7,700 June 3 3,300 $3.20 $10,560 June 22 750 $3.80 $2,850 June 7 1,800 $3.30 $5,940 June 15 500 $3.50 $1,750 7,800 $24,850 2,950 $10,550 Ans 3 In average cost method per unit cost is derived by dividing total cost of goods available for sale by total units available at each transaction of sale or purchase. Date Unit Rate Amount Unit Rate Amount June 1 2,200 $3.00 $6,600 Cost of Good sold 7,800 $3.29 $25,662 June 3 3,300 $3.20 $10,560 Ending Inventory 2,950 $3.29 $9,706 June 7 1,800 $3.30 $5,940 June 15 2,700 $3.50 $9,450 June 22 750 $3.80 $2,850 10,750 $35,400 Average rate ($35400/10750] $3.29