Question

Samuelson and Messenger (SAM) began 2021 with 400 units of its one product. These units were purchased near the end of 2020 for $25 each. During the month of January, 200 units were purchased on January 8 for $28 each and another 250 units were purchased on January 19 for $30 each. Sales of 150 units and 290 units were made on January 10 and January 25, respectively. There were 410 units on hand at the end of the month. SAM uses a perpetual inventory system.Required:
1. Complete the below table to calculate ending inventory and cost of goods sold for January using FIFO.
2. Complete the below table to calculate ending inventory and cost of goods sold for January using average cost.
  

Perpetual FIFO Cost of Goods Available for Sale Cost of Goods Sold - January 10 Cost of Goods Sold - January 25 Inventory Balance # of units Cost per unit Cost of Goods Available for Sale # of units sold Cost per unit Cost of Goods Sold # of units sold Cost per unit Cost of Goods Sold # of units in ending inventory Cost per unit Ending Inventory Beg. Inventory $0 $0.00 $0 $0.00 $0 $0.00 $0 Purchases: January 8 0 0.00 0 0.00 0 0.00 0 January 19 0 0.00 0 0.00 0 0.00 0 Total 0 $0 0 $0 0 $0 0 $0 Perpetual Average Inventory on hand Cost of Goods Sold # of units Cost per unit Inventory Value # of units sold Avg. Cost per unit Cost of Goods Sold Beginning Inventory $0 Purchase - January 8 0 Subtotal Average Cost 0 0 Sale - January 10 0 Subtotal Average Cost 0 0 Purchase - January 19 0 Subtotal Average Cost 0 0 Sale - January 25 0 Total 0 $0 0 $0

Answer 1

Ans. 1	Perpetual FIFO:
	Purchase				Cost of goods sold			Balance
	Date	Quantity	Rate	Total cost	Quantity	Rate	Total cost	Quantity	Rate	Total cost
	1-Jan	400	$25.00	$10,000				400	$25.00	$10,000
	8-Jan	200	$28.00	$5,600				400	$25.00	$10,000
								200	$28.00	$5,600
	10-Jan				150	$25.00	$3,750	250	$25.00	$6,250
								200	$28.00	$5,600
	19-Jan	250	$30.00	$7,500				250	$25.00	$6,250
								200	$28.00	$5,600
								250	$30.00	$7,500
	25-Jan				250	$25.00	$6,250
					40	$28.00	$1,120	160	$28.00	$4,480
								250	$30.00	$7,500
	Total				Cost of goods sold		$11,120	Ending inventory		$11,980
	*In FIFO method the units that have purchased first, are released the first one and the ending inventory
	units remain from the last purchases.
Ans. 2	Perpetual Average:	Inventory on hand			Cost of goods sold
		Quantity	Rate	Total cost	Quantity	Average cost	Total cost
	Beginning inventory	400	$25.00	$10,000
	Purchase - January 8	200	$28.00	$5,600
	Subtotal Average Cost	600	$26.00	15600
	Sale - January 10				150	$26.00	$3,900
	Subtotal Average Cost	450	$26.00	$11,700
	Purchase - January 19	250	$30.00	$7,500
	Subtotal Average Cost	700	$27.43	$19,200
	Sale - January 25				290	$27.43	$7,955
	Total	410	$27.43	$11,245	440		$11,855
	Ending Inventory   = $11,245
	Cost of goods sold = $11,855
	*Units are sold on the previous average cost per unit.
	*Average cost per unit = Subtotal cost / Subtotal units.