Question

Ferris Company began January with 4,000 units of its principal product. The cost of each unit is $6. Merchandise transactions for the month of January are as follows: Purchases Date of Purchase Units Unit Cost* Total Cost Jan. 10 3,000 $ 7 $ 21,000 Jan. 18 4,000 8 32,000 Totals 7,000 53,000 * Includes purchase price and cost of freight. Sales Date of Sale Units Jan. 5 2,000 Jan. 12 1,000 Jan. 20 3,000 Total 6,000 5,000 units were on hand at the end of the month. 5. Calculate January's ending inventory and cost of goods sold for the month using Average cost, perpetual system. (Round average cost per unit to 4 decimal places. Enter sales with a negative sign.)

Answer 1

Calculate Ending inventory and cost of goods sold

	Purchase			Cost of goods sold			Ending inventory
Beg inv							4000	6	24000
Jan 5				2000	6	12000	2000	6	12000
Jan 10	3000	7	21000				5000	6.60	33000
Jan 12				1000	6.6	6600	4000	6.60	26400
Jan 18	4000	8	32000				8000	7.30	58400
Jan 20				3000	7.30	21900	5000	7.30	36500
Jan 31				6000		40500	5000		36500

Cost of goods sold = $40500

Ending inventory = $36500