Question

XYZ Company’s records contained the following data for the month ended 3/31/20:

   Beginning inventory       200 units @ $10/unit
   Purchase 1           1,300 units @ $11/unit
   Sales               1,100 units @ $25/unit
   Purchase 2           1,200 units @ $12/unit
   Sales               1,300 units @ $25/unit
   Purchase 3           1,400 units @ $13/unit
   Sales               1,500 units @ $25/unit
   Purchase 4           600 units @ $13/unit  

Compute ending inventory and prepare partial income statements through gross margin for XYZ Company using the FIFO, LIFO, and average inventory costing methods, first for a periodic and then for a perpetual inventory system.

Answer 1

Calculation XYZ Company Periodic Inventory System Periodic FIFO Decription Beginning Inventory Purchase 1 Purchase 2 Purchase 3 Purchase 4 Goods Available for Sale Ending Inventory Ending Inventory Ending Inventory - total Cost of Goods Sold Quantity Cost per unit Total cost 200 $ 10.00 2,000.00 1,300 $ 11.00 14,300.00 1,200 $ 12.00 14,400.00 1,400 $ 13.00 18,200.00 600 $ 13.00 7,800.00 4,700 56,700.00 600 $ 13.00 7,800.00 200 $ 13.00 2,600.00 800 10,400.00 3,900 46,300.00 Latest purchases of $13 & $13 per unit used to value ending Inv =1, 100+1,300+1,500 = 3,900 units sold Periodic LIFO Decription Beginning Inventory Purchase 1 Purchase 2 Purchase 3 Purchase 4 Goods Available for Sale Ending Inventory Ending Inventory Ending Inventory - total Cost of Goods Sold Quantity Cost per unit Total cost 200 $ 10.00 2,000.00 1,300 $ 11.00 14,300.00 1,200 $ 12.00 14,400.00 1,400 $ 13.00 18,200.00 600 $ 13.00 7,800.00 4,700 56,700.00 200 $ 10.00 2,000.00 600 $ 11.00 6,600.00 800 8,600.00 3,900 48,100.00 Oldest purchases of $10 & $11 per unit used to value ending Inv =56, 700-8, 600= 48,100 Periodic - Average weighted cost Decription Beginning Inventory Purchase 1 Purchase 2 Purchase 3 Purchase 4 Goods Available for Sale Ending Inventory Cost of Goods Sold Quantity Cost per unit Total cost 200 $ 10.00 2,000.00 1,300 $ 11.00 14,300.00 1,200 $ 12.00 14,400.00 1,400 $ 13.00 18,200.00 600 $ 13.00 7,800.00 4,700 $ 12.06 56,700.00 800 $ 12.06 9,651.06 3,900 47,048.94 Average cost per unit = $56,700/4,700 units = $12.06 per unit =800 units * $12.06 = 9,651.06 -56, 700-9,651.06= 47,048.94

XYZ Company Perpetual Inventory System Perpetual- FIFO Goods Purchased Date Quantity Cost per unit Total cost Beg Bal Purchase 1 1,300 $ 11.00 14,300.00 Cost of goods sold Cost per unit Total cost Quantity Ending Inventory Quantity Cost per unit Total cost 200 $ 10.00 2,000.00 200 $ 10.00 2,000.00 1,300 $ 11.00 14,300.00 1,500 16,300.00 Sale 1 200 900 $ $ 10.00 11.00 2,000.00 9,900.00 Purchase 2 1,200 $ 12.00 14,400.00 400 $ 400 $ 1,200 $ 1,600 11.00 11.00 12.00 4,400.00 4,400.00 14,400.00 18,800.00 Sale 2 400 900 $ $ 11.00 12.00 4,400.00 10,800.00 $ 12.00 Purchase 3 1,400 $ 13.00 18,200.00 300 300 300 1,400 1,700 $ $ 12.00 13.00 3,600.00 3,600.00 3,600.00 18,200.00 21,800.00 Sale 3 300 1,200 $ $ 12.00 13.00 3,600.00 15,600.00 Purchase 4 600 $ 13.00 7,800.00 200 200 600 800 800 $ $ $ 13.00 13.00 13.00 2,600.00 2,600.00 7,800.00 10,400.00 10,400.00 Totals 4,500 54,700.00 3,900 46,300.00 Perpetual- LIFO Goods Purchased Cost per unit Total cost Cost of goods sold Cost per unit Total cost Quantity Quantity Date Beg Bal Purchase 1 1,300 $ 11.00 14,300.00 Sale 1 1,100 $ 11.00 12,100.00 Purchase 2 1,200 $ 12.00 14,400.00 Ending Inventory Quantity Cost per unit Total cost 200 $ 10.00 2,000.00 200 $ 10.00 2,000.00 1,300 $ 11.00 14,300.00 1,500 16,300.00 200 $ 10.00 2,000.00 200 $ 11.00 2,200.00 400 4,200.00 200 $ 10.00 2,000.00 200 $ 11.00 2,200.00 1,200 $ 12.00 14,400.00 1,600 18,600.00 200 $ 10.00 2,000.00 100 $ 11.00 1,100.00 300 3,100.00 200 $ 10.00 2,000.00 100 $ 11.00 1,100.00 1,400 $ 13.00 18,200.00 1,700 21,300.00 Sale 2 1,200 100 $ $ 12.00 11.00 14,400.00 1,100.00 Purchase 3 1,400 $ 13.00 18,200.00 Sale 3 1,400 100 $ $ 13.00 11.00 18,200.00 1,100.00 Purchase 4 600 $ 13.00 7,800.00 200 200 600 800 800 $ $ $ 10.00 10.00 13.00 2,000.00 2,000.00 7,800.00 9,800.00 9,800.00 Totals 4,500 54,700.00 3,900 46,900.00 Perpetual - Average weighted cost Goods Purchased Date Quantity Cost per unit Total cost Beg Bal Purchase 1 1,300 $ 11.00 14,300.00 Cost of goods sold Cost per unit Total cost Quantity Calculation =16,300/1,500=10.87 per unit 1,100 $ 10.87 11,953.33 Sale 1 Purchase 2 1,200 $ 12.00 14,400.00 Ending Inventory Quantity Cost per unit Total cost 200 $ 10.00 2,000.00 200 $ 10.00 2,000.00 1,300 $ 11.00 14,300.00 1,500 $ 10.87' 16,300.00 400 $ 10.87 4,346.67 400 $ 10.87 4,346.67 1,200 $ 12.00 14,400.00 1,600 $ 11.72 18,746.67 300 $ 11.72 3,515.00 300 $ 11.72 3,515.00 1,400 $ 13.00 18,200.00 1,700 $ 12.77 21,715.00 200 $ 12.77 2,554.71 200 $ 12.77 2,554.71 600 $ 13.00 7,800.00 800 $ 12.94 10,354.71 800 10,354.71 =18,746.67/1,600=11.72 per unit 1,300 $ 11.72 15,231.67 Sale 2 Purchase 3 1,400 $ 13.00 18,200.00 =21,715/1,700=12.77 per unit 1,500 $ 12.77 19,160.29 Sale 3 Purchase 4 600 $ 13.00 7,800.00 =10,354.71/800=12.94 per unit Totals 4,500 54,700.00 3,900 46,345.29

Calculation XYZ Company Description Beginning Inventory Purchase 1 Purchase 2 Purchase 3 Purchase 4 Goods available for sale Units sold Number of units in ending inventory Quantity 200 1,300 1,200 1,400 600 4,700 3,900 800 Cost per unit Total cost $ 10.00 2,000.00 $ 11.00 14,300.00 $ 12.00 14,400.00 $ 13.00 18,200.00 $ 13.00 7,800.00 56,700 =1,100+1,300+1,500 =3,900*25 Periodic Inventory System Income statement Sales Cost of goods sold Gross Profit Ending Inventory FIFO 97,500.00 46,300.00 51,200.00 10,400.00 LIFO 97,500.00 48,100.00 49,400.00 8,600.00 Average cost 97,500.00 47,048.94 50,451.06 9,651.06 =3,900*25 Perpetual Inventory System Income statement Sales Cost of goods sold Gross Profit Ending Inventory FIFO 97,500.00 46,300.00 51,200.00 10,400.00 LIFO 97,500.00 46,900.00 50,600.00 9,800.00 Average cost 97,500.00 46,345.29 51,154.71 10,354.71