Question

Testbank Exercise 154 Sandhill Corporation sells item A as part of its product line. Information as to balances on hand, purchases, and sales of item A are given in the following table for the first six months of 2020. Quantities Unit Price of Purchase $4.50 $4.8 Date January 11 January 24 February 8 March 16 June 11 Purchased Sold Balance - 440 1,330 1,770 - 340 1,430 - 610 820 620 - 1,440 $5.2 Compute the ending inventory at June 30 under the perpetual LIFO inventory pricing method. Ending inventory Compute the cost of goods sold for the first six months under the periodic FIFO inventory pricing method. Cost of goods sold sl Question Attempts: 0 of 1 used SAVE FOR LATER SUBMIT ANSWER

Answer 1

Ans 1: Perpetual inventory System: In this system, the cost of sales and invenries are updated on every sales and purchase transactions. Last in, first out method (LIFO): In this method it is assumed that inventory which is purchased last will be sold first and the inventory will consist of old purchases. Purchase Cost of Merchandise Sold Date inventory Unit Rate Total Unit Rate Total Unit Rate Total Jan 11 440 $4.50 $1,980.00 Jan 24 1330 $4.80 $6,384.00 $0.00 440 $4.50 $1,980.00 1330 $4.80 $6,384.00 1770 $8,364.00 Feb 8 340 $4.80 $1,632.00 440 990 1430 $4.50 $4.80 $1,980.00 $4,752.00 $6,732.00 340 $1,632.00 Mar 16 610 $4.80 440 $2,928.00 $0.00 $2,928.00 $4.50 $4.80 380 $1,980.00 $1,824.00 $3,804.00 610 820 Jun 11 620 $5.20 $3,224.00 440 380 $4.50 $4.80 $5.20 $1,980.00 $1,824.00 $3,224.00 $7,028.00 620 1440 1950 $9,608.00 950 $4,560.00 1440 $7,028.00 Ending Inventory $7,028.00

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 Jan 11 440 $4.50 $1,980 Jan 24 820 $4.80 $3,936 Jan 24 510 $4.80 $2,448 Jun 11 620 $5.20 $3,224 950 $4,428 1,440 $7,160 Cost of Good Sold $4,428