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Ans. 1 A | FIFO Perpetual: | ||||||||||
Purchase | Cost of goods sold | Balance | |||||||||
Date | Quantity | Rate | Total cost | Quantity | Rate | Total cost | Quantity | Rate | Total cost | ||
01-Jul | 9 | $68.00 | $612 | 9 | $68.00 | $612 | |||||
06-Jul | 6 | $68.00 | $408 | 3 | $68.00 | $204 | |||||
11-Jul | 5 | $76.00 | $380 | 3 | $68.00 | $204 | |||||
5 | $76.00 | $380 | |||||||||
14-Jul | 3 | $68.00 | $204 | ||||||||
2 | $76.00 | $152 | 3 | $76.00 | $228 | ||||||
21-Jul | 7 | $83.00 | $581 | 3 | $76.00 | $228 | |||||
7 | $83.00 | $581 | |||||||||
27-Jul | 3 | $76.00 | $228 | ||||||||
3 | $83.00 | $249 | 4 | $83.00 | $332 | ||||||
Total | Cost of goods sold | $1,241 | Cost of Ending inventory | $332 | |||||||
*In FIFO method the units that have purchased first, are released the first one and the ending inventory | |||||||||||
units remain from the last purchases. | |||||||||||
Ans. 1 B | Moving average | Purchase | Cost of goods sold | Balance | |||||||
Date | Quantity | Rate | Total cost | Quantity | Rate | Total cost | Quantity | Rate | Total cost | ||
01-Jul | 9 | $68.00 | $612 | 9 | $68.00 | $612 | |||||
06-Jul | 6 | $68.00 | $408 | 3 | $68.00 | $204 | |||||
11-Jul | 5 | $76.00 | $380 | 8 | $73.00 | $584 | |||||
14-Jul | 5 | $73.00 | $365 | 3 | $73.00 | $219 | |||||
21-Jul | 7 | $83.00 | $581 | 10 | $80.00 | $800 | |||||
27-Jul | 6 | $80.00 | $480 | 4 | $80.00 | $320 | |||||
Total | Cost of goods sold | $1,253 | Ending inventory | $320 | |||||||
*Weighted average rate is calculated by using the formula of (Total available balance / Total units available). | |||||||||||
Ans. 1 C | LIFO Perpetual: | ||||||||||
Purchase | Cost of goods sold | Balance | |||||||||
Date | Quantity | Rate | Total cost | Quantity | Rate | Total cost | Quantity | Rate | Total cost | ||
01-Jul | 9 | $68.00 | $612 | 9 | $68.00 | $612 | |||||
06-Jul | 6 | $68.00 | $408 | 3 | $68.00 | $204 | |||||
11-Jul | 5 | $76.00 | $380 | 3 | $68.00 | $204 | |||||
5 | $76.00 | $380 | |||||||||
14-Jul | 5 | $76.00 | $380 | 3 | $68.00 | $204 | |||||
21-Jul | 7 | $83.00 | $581 | 3 | $68.00 | $204 | |||||
7 | $83.00 | $581 | |||||||||
27-Jul | 6 | $83.00 | $498 | 3 | $68.00 | $204 | |||||
1 | $83.00 | $83 | |||||||||
Total | Cost of goods sold | $1,286 | Ending inventory | $287 | |||||||
*In LIFO method the units that have purchased last, are released the first one and the ending inventory | |||||||||||
units remain from the first purchases. | |||||||||||
Ans. 2 | FIFO method produces the highest ending inventory valuation. Ending inventory of FIFO method is $332 which is higher than | ||||||||||
Moving average ($320) or LIFO ($287). | |||||||||||
Purchases Date Units Unit Cost Sales Units July 1 9 $68 July 6 6 July 11...
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