Question

2) The Bata Company had the following activity involving inventory during June: Price Units 100 $ Amount 4,000 40 200 8,400 20 Beginning Inventory June 2 sale June 5 purchase June 10 sale June 15 sale June 20 purchase June 25 sale June 28 purchase June 29 sale 100 4,400 9,000 100 Complete the following table (15 points)

Answer 1

cost of goods sold ($) Cost flow FIFO LIFO Periodic LIFO perpetual Average cost (Periodic) Average cost (Perpetual) Ending inventory 18,150 Qty 170 @ $ 45 18,860 Qty 170 18,340 Qty 170 (30@ $40 + 40 @ $40 + 100 @ $45) 18,490 Qty 170 @$43 18,218 Qty 170 @$44.6 Total($) 7650 6940 7460 73101 7582

In perpetual system, the inventory records are maintained and updated as and when there is change in inventory Whereas, in Periodic system, the inventory records are updated at periodic intervals when the physical count of inventory is taken FIFO FIFO (First In First Out) method is as the name suggests, the stock which is purchased is sold first. Date Purchases Sale Balance Qty Amt(s) (Qty*rate) Qty 4,000 Rate($) 40 Amt($) (Qty*rate) Rate($) Qty Rate($) Opening 100 100 50 40 2,000 50 2-Jun 5-Jun 40 40 40 42 Amt($) 4,000 2,000 2,000 8,400 200 428,400 50 200 10-Jun 50 40 2,000 150 42 6,300 2042840 15-Jun 20-Jun 50 1 30 30 100 42 2,100 42 1,260 4 2 1,260 444,400 100 44 4 ,400 25-Jun 30 30 42 44 1,260 1,320 28-Jun 200459,000 70 70 200 443,080 443,080 45 9,000 29-Jun 70 30 430 443,080 45 1,350 18,150 170 170 45 45 7,650 7,650 600 25,800 The cost of goods sold : $18150 Ending inventory: Qty 170 @ $45 amounting to $7650

LIFO (perpetual) As the name Last in First Out (LIFO) sugests, the inventory which is purchased at last is sold first. Date Purchases Sale Balance Rate($) 40 Amt($) (Qty*rate) Qty 4,000 Rate($) Amt($) (Qty*rate) Qty Rate($) Amt($) Opening 100 2-Jun 5-Jun 50 40 2,000 200 428,400 50 50 200 40 40 42 4 10-Jun 15-Jun 20-Jun 200 20 2 40 8,400 800 100 444,400 25-Jun 60 4 4 2,640 28-Jun 2,000 2,000 8,400 2,000 1,200 1,200 4,400 1,200 1,760 1,200 1,760 9,000 1,200 1,760 4,500 7,460 200 45 100 30 40 30 40 200 30 40 100 170 9,000 40 40 44 40 44 40 44 45 40 44 45 1 29-Jun 100 454,500 600 25,800 430 18,340 The cost of goods sold : $18340 Ending inventory: Qty 170 (30@ $40 + 40@ $40 + 100@$45) amounting to $ 7460

Average cost method (Perpetual) Average cost method as the name suggests, the invenotry is calculated at average rate which is calculated as total cost of inventory divided by total count of inventory Date Purchases Balance Amt($) Rate(s) (Qty rate) Qty 404,000 Ratels) Amts] Qtyrate) Qty Opening 100 100 50 50 40 2.000 200 4 2 8,400 250 200 8.320 50 416 41.6 Rate($) Amt/Balance total aty) Amt($) 4,000 2.000 41.60 10,400 41.60 2,080 1,248 4245 5,648 43.45 3.041 44.60 12,041 44.60 107582 7,582 2-Jun S.Jun 10 Jun 15-Jun 20 Jun 25-Jun 28 Jun 29 Jun 20 100 444,400 130 60 43.45 2,607 200459.000 100 430 44.60 4,460 18,218 270 170 70 600 25,800 1 The cost of goods sold: $18218 Ending inventory: Qty 170 @ $44.60 amounting to $7582

ary LIFO (Periodic) In UFO periodic the company will not maintain and update the records as and when there is change in inventory. But calculate the cost of goods sold at the end of month/year Amts) Total Purchases 600 25800 Total sales 430 18860 (200*$45) (100*544)-(130*42) 1706940 The cost of goods sold: $18860 Ending Inventory: Qty 170 amounting to $6940 Average cost (Periodic) In this method, we will calculate the cost of inventory at average rate and apply that rate to both inventory at end and also the cost of goods sold Total purchase ty Total cost of purch Average rate 600 25800 Cost of goods sold 430*43 Ending Inventory: Qty 170 $43 $18,490 $7,310