Question

Ferris Company began January with 6,000 units of its principal product. The cost of each unit is $5. Merchandise transactions for the month of January are as follows:

	Purchases
Date of Purchase	Units		Unit Cost*			Total Cost
Jan. 10	5,000		$	6			$	30,000
Jan. 18	6,000			7				42,000
Totals	11,000							72,000

* Includes purchase price and cost of freight.

Sales
Date of Sale	Units
Jan. 5	3,000
Jan. 12	2,000
Jan. 20	4,000
Total	9,000

8,000 units were on hand at the end of the month.

2. Calculate January's ending inventory and cost of goods sold for the month using LIFO, periodic system.

Required information

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Ferris Company began January with 6,000 units of its principal product. The cost of each unit is $5. Merchandise transactions for the month of January are as follows:

	Purchases
Date of Purchase	Units		Unit Cost*			Total Cost
Jan. 10	5,000		$	6			$	30,000
Jan. 18	6,000			7				42,000
Totals	11,000							72,000

* Includes purchase price and cost of freight.

Sales
Date of Sale	Units
Jan. 5	3,000
Jan. 12	2,000
Jan. 20	4,000
Total	9,000

8,000 units were on hand at the end of the month.

4. Calculate January's ending inventory and cost of goods sold for the month using Average cost, periodic system.

Answer 1

2 LIFO 4 Average Cost Ending Inventory Cost of goods Sold 47,000 $ 55,000 48,000S 54,000 5 6 $ $ $ $ $ Total 30,000 30,000 42,000 102,000 7 Notes: Production Units =6,000+5,000+6,000 = 17,000 Ending Inventory Units = 8,000 Sale Units = 9,000 Cost of goods available for Sale Particulars Units Unit Cost Beginning Inventory, January month 6000 Jan.10 5000 Jan. 18 6000 17000 LIFO Method : Ending Inventory Particulars Units Unit Cost Beginning Inventory, January month 3000 Jan.10 3000 Jan.18 2000 8000 Cost of goods Sold = Cost of Goods available for Sale - Ending Inventory = $102,000-$47,000 = $55,000 Average Cost Method Unit Cost = Total Cost/No of Units available for Sale = $102,000/17,000 = $6.00 Cost of Goods Sold = 9,000*$6 = $54,000 Ending Inventory = 8,000 *$6 = $48,000 5 6 $ $ Total 15,000 18,000 14,000 47,000