Question

y Inventory Valuation (16 points) prima Co, began the month of September with 1.000 units of inventory on hand at a cost of $45 each. These inventory items sell for $65.00 each. Prima adjusts and closes its books on a monthly basis. The following schedule presents the sales and purchases of this item during the month of September Date Unit cost September 9 September 15 September 22 September 27 Transaction Sold 200 units Purchased 400 units P urchased 300 units Sold 450 units ISSO $52 A count of ending inventory reveals 1,050 units in ending inventory REQUIRED: First, complete the followinp table with the information to be reported at the end of September under each of the three cost flows and systems below. Second, answer question 2 in the space provided COGS ENDING INVENTORY FIFO Periodic System LIFO Perpetual system Average Cost Periodic System 2. Provide Prima's adjusting journal entry to record September COGS under FIFO, Periodic System Account name Debit Credit

Answer 1

1.

		Cost of Goods Available for Sale
		Quantity	Unit Cost	Amount
Sep-01	Beginning Inventory	1000	$            45.00	$    45,000.00
Sep-15	Purchase	400	$            50.00	$    20,000.00
Sep-22	Purchase	300	$            52.00	$    15,600.00
	TOTAL	1700		$    80,600.00

FIFO
Under FIFO, Goods purchased first are sold first.

		Ending Inventory
		Quantity	Unit Cost	Amount
Sep-22	Purchase	300	$            52.00	$    15,600.00
Sep-15	Purchase	400	$            50.00	$    20,000.00
Sep-01	Beginning Inventory	350	$            45.00	$    15,750.00
	TOTAL	1050		$    51,350.00

Cost of Goods Sold = Cost of Goods Available for Sale - Ending Inventory
= $80600 - $51350 = $29250

LIFO
Under LIFO, Goods purchased at last are sold first

		Ending Inventory
		Quantity	Unit Cost	Amount
Sep-01	Beginning Inventory	1000	$            45.00	$    45,000.00
Sep-15	Purchase	50	$            50.00	$      2,500.00
	TOTAL	1050		$    47,500.00

Cost of Goods Sold = Cost of Goods Available for Sale - Ending Inventory
= $80600 - $47500 = $33100

Weighted Average
Average cost per unit = $80600 / 1700 = $47.41 per unit
Ending Inventory = 1050 x $47.41 = $49781
Cost of Goods Sold = Cost of Goods Available for Sale - Ending Inventory
= $80600 - $49781 = $30819

2.

Account Titles	Debit	Credit
Ending Inventory	$    51,350.00
Cost of Goods sold	$    29,250.00
Purchase		$    35,600.00
Beginning Inventory		$    45,000.00