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Better Bottles, Inc., uses a periodic inventory system and has the following information available: ON # of Units $ Description 4 Beginning Inventory 5 Jan. 15 Purchase 6 Jan. 20 Purchase 7 Goods Available for Sale 8 Less: January Sales 9 Ending Inventory 10 Cost per Unit 20.00 22.00 30.00 WP T otal Cost 400.00 594.00 990.00 1,984.00 12 Required: 13 1) Calculate both the Ending Inventory and cost of Goods Sold using Periodic FIFO. FIFO Ending Inventory # of Units Cost per Unit te Total Cost Description 17 Jan. 20 Purchase 18 Jan. 15 Purchase 44 & FIFO Cost of Goods Sold # of Units Cost per Unit Total Cost Description 23 Beginning inventory Sheet1

Answer 1

Periodic inventory System: In this system, the cost of sales and inventory are determined as the end of the accounting period. Ans 1 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 Beginning Inventory $20.00 $400 Jan 20 purchase $30.00 $990 Jan 15 purchase $22.00 $352 Jan 15 purchase $22.00 $242 $752 $1,232 Ending inventory $1,232 Cost of Goods Sold $752 20 16 36 Ans 2 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. Cost of Goods Sold Ending inventory Date Unit Rate Amount Date Unit 1 Rate Amount Jan 20 purchase 33 $30.00 $990 Beginning Inventory 20 $20.00 $400 Jan 15 purchase 3 $22.00 $66 Jan 15 purchase 24 $22.00 $528 $1,056 44 $928 Ending inventory Cost of Goods Sold $1,056 36 $928

Ans 3 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 opening inventory and units purchased during the year Date Unit Rate Amount Cost of Goods Sold 36 24.80 $893 Beginning Inventory 20 $20.00 $400 Ending inventory 4 4 24.80 $1,091 Jan 15 purchase 27 $22.00 $594 Jan 20 purchase 33 $30.00 $990 Good Available for sale $1,984 Weighted Average Cost Cost of good available for sale Number of unis available for sals 24.80 Ans 4 Beginning Inventory Add: Purchase Goods Available for sale Less: Ending Inventory Cost of Good Sold FIFO $400 $1,584 $1,984 ($1,232) $752 LIFO $400 $1,584 $1,984 ($928) $1,056 Wtd Avg. $400 $1,584 $1,984 $1,091 $893