Question

Brief Exercise 8-7 Inventory cost flow methods; perpetual system (L08-4] Samuelson and Messenger (S&M) began 2018 with 200 units of its one product. These units were purchased near the end of 2017 for $25 each. During the month of January, 100 units were purchased on January 8 for $28 each and another 200 units were purchased on January 19 for $30 each. Sales of 125 units and 100 units were made on January 10 and January 25, respectively. There were 275 units on hand at the end of the month. S&M uses a perpetual inventory system. Required: 1. Complete the below table to calculate ending inventory and cost of goods sold for January using FIFO method. 2. Complete the below table to calculate ending inventory and cost of goods sold for January using average cost method. Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Complete the below table to calculate ending inventory and cost of goods sold for January using average cost method. (Round cost per unit to 2 decimal places and other answers to nearest whole number. Enter inventory reductions from sales as negative numbers.) Perpetual Average Cost of Goods Sold # of Avg. Cost of units Cost Goods sold per unit Sold Beginning Inventory Purchase - January Inventory on hand # of Cost Inventory per units Value unit 200 25.00 $ 5,000 100 28.00 2,800 300 26.00 7,800 125 26.00 3,250 425 11,050 Subtotal Average Cost Sale - January 10 Subtotal Average Cost Purchase - January 19 Subtotal Average Cost Sale - January 25 Total 200 30.00 6,000 625 17,050 100 % 725 0 17,050 $ 0 $ 0

Take notice of sales of 125 and 100 units. Is there something that would cause the sales to be different than that in the problem? There was no mention in the problem of a change in the amounts being sold on Jan. 10 and Jan 25. I guess I am having a hard time seeing when a change took place if any change took place either way the system marked it incorrect.  

Answer 1

Average Cost Method
Particular			Inventory on Hand			Cost of Goods Sold
			Units	Cost per Unit ($)	Inventory Value	Units Sold	Cost per Unit ($)	Cost of Goods Sold
Opening Inventory			200	25.00	5,000			-
Purchase - January 8			100	28.00	2,800			-
Subtotal Average Cost			300	26.00	7,800			-
Sale - 10th January						125	26.00	3,250
Subtotal Average Cost			175	26.00	4,550			-
Purchase - January 19			200	30.00	6,000			-
Subtotal Average Cost			375	28.13	10,550			-
Sale - 25th January					-	100	28.13	2,813
Closing Balance			275	28.13	7,737			-

Balancing Figure

FIFO Method
Particular			Inventory on Hand			Cost of Goods Sold
			Units	Cost per Unit ($)	Inventory Value	Units Sold	Cost per Unit ($)	Cost of Goods Sold
Opening Inventory			200	25.00	5,000			-
Purchase - January 8			100	28.00	2,800			-
Sale - 10th January						125	25.00	3,125
Purchase - January 19			200	30.00	6,000			-
Sale - 25th January					-	75	25.00	1,875
Sale - 25th January						25	28.00	700
Closing Balance			75	28.00	2,100
Closing Balance			200	30.00	6,000
Closing Balance - Total			275	29.45	8,100