Question

Compute ending inventory and cost of goods sold under FIFO and average-cost, assuming Cambridge uses the periodic inventory system.

On December 1, 2020, Cambridge Printers had the account balances shown below.

	Debit		Credit
Cash	£ 4,650	Accumulated Depreciation – Equipment	£ 1,500
Accounts Receivable	3,900	Accounts Payable	3,000
Inventory	1,950 (3,000 x £0.65)	Owner’s Capital	27,000
Equipment	21,000
	£ 31,500		£ 31,500

The following transactions occurred during December.

December 3: Purchased 4,000 units of inventory on account at a cost of £0.72 per unit.

December 5: Sold 4,400 units of inventory on account for £0.92 per unit. (It sold 3,000 of the £0.65 units and 1,400 of the £0.72.).

December 7: Granted the December 5 customer £184 credit for 200 units of inventory returned costing £144. These units were returned to inventory.

December 17 Purchased 2,200 units of inventory for cash at £0.78 each.

December 22 Sold 2,000 units of inventory on account for £0.95 per unit. (It sold 2,000 of the £0.72 units.)

Adjustment data: 1) Accrued salaries payable £400. 2) Depreciation £200 per month.

Answer 1

FIFO Cost per Cost of Goods Available for Sale Cost of Goods Units Cost per unit Available for sale 3000 $ 0.65 $ 1,950 Cost of Goods sold - FIFO Cost of goods Units sold unit sold 3000 $ 0.65 $ 1,950 Ending Inventory-FIFO Cost per Ending units unit Inventory 0 $ 0.65 $ - Beginning Inventory Purchases: Dec 3 Dec 5 Dec 17 4000 $ 0.72 $ 2,880 600 3400 -200 $ $ $ 2,448 -144 0.72 $ 0.72 $ 0.78 $ $ $ $ $ 0.72 $ 0.72 $ 0.78 $ $ 432 144 1,716 2,292 $ 0.78 0 200 2200 3000 2200 9200 $ $ 1,716 6,546 Total 6200 4,254 Weighted Average Cost Ending Inventory-Avg cost Cost per Ending units unit Inventory Cost of Goods Available for Sale Cost of Goods sold - Avg cost Cost of Goods Units Cost per cost of goods Cost per unit Units sold Available for sale unit sold 3000 $ 0.65 $ 1,950 6200 $ 0.71 $ 4,402 4000 $ 0.72 $ 2,880 2200 $ 0.78 $ 1,716 9200 $ 6,546 6200 $ 4,402 3200 $ 0.71 $ Beginning Inventory Purchases: Dec 3 Dec 17 Total 2,272 3200 $ 2,272 Average cost p.u (6546/9200) $ 0.71 a. FIFO Cost of Goods sold $ 4,254 $ 4,402 Cost of Ending Inventory $ 2,292 $ 2,272 b. Weighted Average