Question

1. Alternative Inventory Methods

   Totman Company has the following transactions during the months of January and February:

   Date	Transaction	Units	Cost/Unit
   January 1	Balance	200
   10	Purchase	50	$25
   22	Sale	40
   28	Purchase	60	27
   February 4	Purchase	40	28
   14	Sale	50
   23	Sale	20

   The cost of the inventory at January 1 is $24, $23, and $15 per unit, respectively, under the FIFO, average, and LIFO cost flow assumptions.

   Required:

   1. Compute the cost of goods sold for each month and the inventories at the end of each month for the following alternatives:
      1. FIFO periodic

         	Cost of Goods Sold	Ending Inventory
         January	$	$
         February	$	$

      2. FIFO perpetual

         	Cost of Goods Sold	Ending Inventory
         January	$	$
         February	$	$

      3. LIFO periodic

         	Cost of Goods Sold	Ending Inventory
         January	$	$
         February	$	$

      4. LIFO perpetual

         	Cost of Goods Sold	Ending Inventory
         January	$	$
         February	$	$

      5. Weighted average (Round unit costs to 4 decimal places and round final answers to nearest dollar.)

         	Cost of Goods Sold	Ending Inventory
         January	$	$
         February	$	$

      6. Moving average (Round unit costs to 4 decimal places. Round final answers to nearest dollar.)

         	Cost of Goods Sold	Ending Inventory
         January	$	$
         February	$	$

   2. Reconcile the difference between the LIFO periodic and the LIFO perpetual results.

      January	Cost of Goods Sold	Ending Inventory
      Difference	$	$
      February	Cost of Goods Sold	Ending Inventory
      Difference	$	$

   3. If the company had purchased an additional 25 units for $30 each on February 27, compute the cost of goods sold for February under FIFO periodic and LIFO periodic.

      February	FIFO periodic:	LIFO periodic:
      Cost of Goods Sold:	$	$

   4. When computing inventory turnover ratios, it's preferable to use a   measure because it avoids distortions caused by including   costs in inventory. Use of the preferable method results in a   inventory turnover.

Answer 1

Ref. No. FITO Periodic for the month January Parchases Sales Balance - Date particulars Onits cost for total aut uit rotal cruits lost fan Total Jan. J. Balance old.aso ditu 20024 4400 (200x24) - to. Purchases 50/25 1250 50 25 12501 - 22 Sale 40 24 960 160 24 38407 50 25 1250 60 27 1620 Purchases - - 116094 3840 50 85 1950 8o 27 (6201

FIFO periodic

FITO Periodic for February Total ilance aunt 1947 otal 160 24 urchase Date llaut culars uit la total and cost feb. 1. To balold. H 160x2y = 38407 50826 - 1250 60x27= 1620 feb 4 Purchases 40 28 1120 |-|- B025 60 27 38407 12.900 1600 e 3840 18so 11620 1180 86401 1250 1620 -Feb, 14 Sale - - - 1200 10 04 lo feb. 23 Sale - - 2760 20 24 480 علم مو به همه به 1620

for January COST OF GOODS SOLD Opening stock+ purchases-closing stock

=4800+2870-6710

=960

for February COST OF GOODS SOLD Opening stock+ purchases-closing stock

=6710+1120-6150

=1680

	Cost of Goods Sold	Ending Inventory
January	$ 960	$ 6710
February	$ 1680	$ 6150

FIFO perpetual

sales on 22 jan. 40*24=960

sale in the month of feb.

sale on 14 feb. 50*24= 1200

sale on 23 feb. 20*24=480

	Cost of Goods Sold	Ending Inventory
January	$ 960	$ 6710
February	$ 1680	$ 6150

LIFO

Balance C. LIFO Porodic for January Pwechares | Saly Date lasti alaus put out Total cut out Total Nut Cort Total - Jan. 1 To Balance. [ 200 x 15.) - 200 15 3000 Jan 10 Purchases 150/25 1250 - |-|- 5025 1250) -22 sale - - 40.95 1000 20015 3000 1025 250 1-28 Pwechases 60 27 16ão - - 200 15 3000) 200 15 3000 60 27 16201

LI to Periodic for february Purchases Balance ust Date Particulars Just out Total a 1 feb. To Balance (200x15=3000) 10 X2= 20 L60X272 1 620 24. Feb. Purchases. 40 28 1120 - out your Total 700 15 3000, 10 25 250 160 27 1620 200 15 3000 10 ås 60 27 1620 1120 3000 14. feb. sale 40 28 1139 10 27 270 10 25 0 27 1350 2. feb Sale 20 27 540 200 15 10 & 5 30 27 3000 20 800

LIFO Cost of goods sold = opening stock+purchses-closing stock

=3000+2870-4870

=1000

for the month of feb.

4870+1120-4060

=1930

LIFO periodic

	Cost of Goods Sold	Ending Inventory
January	$ 1000	$ 4870
February	$ 1930	$ 4060

LIFO perpetual

cost of goods sold (jan)=40*25=1000

cost of goods sold (feb.) = 40*28=1120

= 10*27=270

= 20*27=540

	Cost of Goods Sold	Ending Inventory
January	$ 1000	$ 4870
February	$ 1930	$ 4060

e. Weighted Average for January Turchases Sales Date Particulars but lout Total aut Cost Total Jan. 1. To Balance 3 4 (200X232460) - 10 Purchases 150 25 1125 balance out with Total a 200/23 (4600 Ref. No DU 23 4 bode 3 50 92.41 5850 - 22 sale - - 40 234 936 91093-4 4914 -28 Purchases 60 27 1690 -- 270 242 6534

Weighted Average bruary U C Balance . Ouit wechases Sales Date Posticulars aut cost voter surt cost total vurt Cost 1. feb. To Balance Total (270 x 24.226534.) - - - 270/242/6534. 4. feb. Purchases - 310224.69|7654 s4 feb. sale - - - 50 24.691 234,526024.696419.41 23 feb. sale - - - 20 24.69 493.8 240 24.69 5925.6 Illdol -

Weighted average (Round unit costs to 4 decimal places and round final answers to nearest dollar.)

cost of goods sold for the month of Jan.

4600+1250+1620-6534

=936

for the month of feb.

=6534+1120-5925.6

=1728.4

	Cost of Goods Sold	Ending Inventory
January	$ 936	$ 6534
February	$ 1728.4	$ 5925.6