Question

BE 8-6 Inventory cost flow methods, perpetual system LO8-4 Samuelson and Messenger (SAM) began 2021 with 200 units of its one product. These units were purchased near the end of 2020 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. SAM uses a perpetual inventory system. Calculate ending inventory and cost of goods sold for January using (1) FIFO and (2) average cost.

Answer 1

As per FIFO
	Cost of goods available for sale			Cost of goods sold			Ending inventory
	units	Cost per unit	Total	units	Cost per unit	Total	units	Cost per unit	Total
Beg. Inv.	200	$25.00	$5,000.00	125	$25.00	$3,125.00
Purchases:				75	$25.00	$1,875.00
8-Jan	100	$28.00	$2,800.00	25	$28.00	$700.00	75	$28.00	$2,100.00
19-Jan	200	$30.00	$6,000.00				200	$30.00	$6,000.00
Total	500		$13,800.00	225		$5,700.00	275		$8,100.00
As per Average Method
	Cost of goods available for sale			Cost of goods sold			Ending inventory
	units	Cost per unit	Total	units	Cost per unit	Total	units	Cost per unit	Total
Beg. Inv.	200	$25.00	$5,000.00
Purchases:
8-Jan	100	$28.00	$2,800.00
19-Jan	200	$30.00	$6,000.00
Total	500		$13,800.00	225	$27.60	$6,210.00	275	$27.60	$7,590.00
					(13800/500)