Question

Use the following information to answer questions 5 & 6: Barton Company uses a periodic inventory system. On January 1, Year 22, Barton Company had 600 units of inventory on hand at a cost of $8 per unit. During Year 22, Barton made the following inventory purchases. April 1 Purchased 200 units at $10 s at $10 June 1 Purchased 150 units at $12 September 1 Purchased 400 units at $14 November 1 Purchased 500 units at $15 Assume Barton Company sold 1,150 units of inventory during Year 22. T.

Answer 1

On January 1 year 22

Beginning Inventory =600 units cost @$8/unit

Given goods sold 1,150 units during year 22

Ending inventory=Beginning inventory+Purchases-Goods sold=600+1250-1150=700units

Q5 ) FIFO Method (First in first out basis) This method assumes that items bought first were sold first

Calculation of Cost of goods sold is as follows

Particulars	Units	Rate	Amount
Beginning Inventory	600	$8	$4800
April1	200	$10	$2000
June1	150	$12	$1800
September1	200	$14	$2800
Total	1150		$11400

Value of Ending Inventory is as follows

Particulars	Units	Rate	Amount
September1	200	$14	$2800
November1	500	$15	$7500
Total	700		$11400

Since on September 1 total 400 units were bought out of 200 units will be considered as sold as per FIFO basis

Therefore remaining 200 units were taken in ending inventory

Q6)Average Cost method

Particulars	Units	Rate	Amount
Beginning Inventory	600	$8	$4800
April1	200	$10	$2000
June1	150	$12	$1800
September1	400	$14	$5600
November1	500	$15	$7500
Total	1850		$21700

Average cost per unit = Total Inventory purchased/Total no of Units

                                   =$21700/1850

                                   =$11.73

Therefore Cost of goods sold=Goods sold * Average cost per unit=1150*$11.73=$13489.5

Ending Inventory value=700 units*$11.73=$8211