Question

Ferris Company began January with 4,000 units of its principal product. The cost of each unit is $7. Merchandise transactions for the month of January are as follows:

	Purchases
Date of Purchase	Units		Unit Cost*			Total Cost
Jan. 10	3,000		$	8			$	24,000
Jan. 18	4,000			9				36,000
Totals	7,000							60,000

* Includes purchase price and cost of freight.

Sales
Date of Sale	Units
Jan. 5	2,000
Jan. 12	1,000
Jan. 20	3,000
Total	6,000

5,000 units were on hand at the end of the month.
3. Calculate January's ending inventory and cost of goods sold for the month using FIFO, perpetual system. Cost of Goods Available for Sale Cost of Goods Sold - January 5 Cost of Goods Sold - January 12 Cost of Goods Sold - January 20 Inventory Balance Perpetual FIFO: # of units Unit Cost Cost of Goods Available for Sale # of units Cost per unit Cost of Goods Sold # of units Cost per sold unit Cost of Goods Sold # of units Cost per sold unit Cost of Goods Sold # of units in ending inventory Cost per unit Ending Inventory sold $ 0.00 $ $ 0.00 $ | $ 0.00 $ $ 7.00 $ Beg. Inventory Purchases January 10 January 18 Total 0 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 $ 00

Answer 1

Ending inventory-Perpetual FIFO No of Unit Cost Per Unit Ending inventory Ans 3: 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 recent purchases. Cost of Goods Available for Sale Cost of Good Sold January 5 Cost of Good Sold January 12 Cost of Good Sold January 20 Perpetual LIFO Cost of Goods No of Cost Per Cost Per Cost of Good Cost Per Cost of Cost Per Available for No of Unit Cost of No of Unit No of Unit Unit Unit Unit Sold Unit Good Sold Unit Good Sold Sale Beginning 4000 $7 $28,000 2000 $14,000 1000 $7,000 1000 $7,000 Purchases : Jan'10 3000 $24,000 2000 $16,000 Jan'18 4000 $36,000 $0 $0 Total 11000 $88,000 2000 $14,000 1000 $7,000 3000 $23,000 $7 $7 $0 $8 $0 $8 $9 $9 1000 4000 5000 59 $8,000 $36,000 $44,000 Ans 4: In weighted average cost method per unit purchase is derived by adding cost opening inventory and purchase made during the year and then dividing it by the adding the units of opeinng inventory and units purchased during the year Cost of Goods Available for Sale Cost of Good Sold Periodic Average Ending inventory-Periodic Average Average Cost No of Unit No of Unit Cost Per Unit $7 Cost of Goods Available for Sale $28,000 Cost Per Unit No of Unit Cost of Good Sold Cost Per Unit Ending inventory 4000 Beginning Purchases : Jan'10 Jan'18 3000 4000 $9 $24,000 $36,000 $88,000 tal 11000 6000 $8 $48,000 5000 $8 $40,000

Ans 5: Perpetual Average Cost inventory on hand No of Cost Per Ending Unit Unit inventory 4000 $7.0000 $28,000 Cost of Good Sold Cost Per Cost of Good No of Unit Unit Sold 2000 $7.0000 $14,000 2000 3000 5000 $7.0000 $8.0000 $7.6000 $14,000 $24,000 $38,000 Beginning Sale January 5 Sutobtal Average Cost Purchase - January 10 Sutobtal Average Cost Sale January 12 Sutobtal Average Cost Purchase - January 18 Subtal Average Cost Purchase - January 20 Subtal Average Cost 1000 $7.6000 $7,600 4000 4000 8000 $7.6000 $9.0000 $8.3000 $30,400 $36,000 $66,400 3000 $8.3000 $24,900 5000 $8.3000 $41,500