Ferris Company began January with 6,000 units of its principal product. The cost of each unit is $8. Merchandise transactions for the month of January are as follows:
Required:
Calculate January's ending inventory and cost of goods sold for the month using each of the following alternatives:
1. FIFO, periodic system
2. LIFO, periodic system
3. FIFO, perpetual system
4. Average cost, periodic system
5. Average cost, perpetual system
Solution 1:
Computation of COGS and ending inventory - Periodic FIFO | |||||||||
Particulars | Cost of goods available for sale | Cost of goods sold | Ending Inventory | ||||||
Nos of units | Unit Cost | Cost of goods available for sale | Nos of units sold | Unit Cost | Cost of goods sold | Nos of units in ending inventory | Unit Cost | Ending inventory | |
Beginning inventory | 6000 | $8.00 | $48,000 | 6000 | $8.00 | $48,000.00 | 0 | $8.00 | $0.00 |
Purchases: | |||||||||
10-Jan | 5000 | $9.00 | $45,000 | 3000 | $9.00 | $27,000.00 | 2000 | $9.00 | $18,000.00 |
18-Jan | 6000 | $10.00 | $60,000 | 0 | $10.00 | $0.00 | 6000 | $10.00 | $60,000.00 |
Total | 17000 | $153,000 | 9000 | $75,000.00 | 8000 | $78,000.00 |
Solution 2:
Computation of COGS and ending inventory - Periodic LIFO | |||||||||
Particulars | Cost of goods available for sale | Cost of goods sold | Ending Inventory | ||||||
Nos of units | Unit Cost | Cost of goods available for sale | Nos of units sold | Unit Cost | Cost of goods sold | Nos of units in ending inventory | Unit Cost | Ending inventory | |
Beginning inventory | 6000 | $8.00 | $48,000 | 0 | $8.00 | $0.00 | 6000 | $8.00 | $48,000.00 |
Purchases: | |||||||||
10-Jan | 5000 | $9.00 | $45,000 | 3000 | $9.00 | $27,000.00 | 2000 | $9.00 | $18,000.00 |
18-Jan | 6000 | $10.00 | $60,000 | 6000 | $10.00 | $60,000.00 | 0 | $10.00 | $0.00 |
Total | 17000 | $153,000 | 9000 | $87,000.00 | 8000 | $66,000.00 |
Solution 3:
Computation of ending inventory COGS under FIFO - Perpectual | ||||||||||||
Date | Beginning Inventory | Purchase | Cost of Goods Sold | Ending Inventory | ||||||||
Qty | Rate | Amount | Qty | Rate | Amount | Qty | Rate | Amount | Qty | Rate | Amount | |
1-Jan | 6000 | $8.00 | $48,000.00 | 0 | $0.00 | $0.00 | 0 | $0.00 | $0.00 | 6000 | $8.00 | $48,000.00 |
5-Jan | 6000 | $8.00 | $48,000.00 | 0 | $0.00 | $0.00 | 3000 | $8.00 | $24,000.00 | 3000 | $8.00 | $24,000.00 |
10-Jan | 3000 | $8.00 | $24,000.00 | 5000 | $9.00 | $45,000.00 | 0 | $0.00 | $0.00 | 3000 | $8.00 | $24,000.00 |
5000 | $9.00 | $45,000.00 | ||||||||||
12-Jan | 3000 | $8.00 | $24,000.00 | 0 | $0.00 | $0.00 | 2000 | $8.00 | $16,000.00 | 1000 | $8.00 | $8,000.00 |
5000 | $9.00 | $45,000.00 | 5000 | $9.00 | $45,000.00 | |||||||
18-Jan | 1000 | $8.00 | $8,000.00 | 6000 | $10.00 | $60,000.00 | 0 | $0.00 | $0.00 | 1000 | $8.00 | $8,000.00 |
5000 | $9.00 | $45,000.00 | 5000 | $9.00 | $45,000.00 | |||||||
6000 | $10.00 | $60,000.00 | ||||||||||
20-Jan | 1000 | $8.00 | $8,000.00 | 0 | $0.00 | $0.00 | 1000 | $8.00 | $8,000.00 | 2000 | $9.00 | $18,000.00 |
5000 | $9.00 | $45,000.00 | 3000 | $9.00 | $27,000.00 | 6000 | $10.00 | $60,000.00 | ||||
6000 | $10.00 | $60,000.00 | ||||||||||
Total | 9000 | $75,000.00 | 8000 | $78,000.00 |
Solution 4:
Computation of COGS and ending inventory - Periodic Weighted Average cost method | |||||||||
Particulars | Cost of goods available for sale | Cost of goods sold - Average cost | Ending Inventory - Average cost | ||||||
Nos of units | Unit Cost | Cost of goods available for sale | Nos of units sold | Unit Cost | Cost of goods sold | Nos of units in ending inventory | Unit Cost | Ending inventory | |
Beginning inventory | 6000 | $8.00 | $48,000 | ||||||
Purchases: | |||||||||
10-Jan | 5000 | $9.00 | $45,000 | ||||||
18-Jan | 6000 | $10.00 | $60,000 | ||||||
Total | 17000 | $9.00 | $153,000 | 9000 | $9.00 | $81,000 | 8000 | $9.00 | $72,000 |
Solution 5:
Computation of ending inventory COGS under Weighted Average Cost - Perpectual | ||||||||||||
Date | Beginning Inventory | Purchase | Cost of Goods Sold | Ending Inventory | ||||||||
Qty | Rate | Amount | Qty | Rate | Amount | Qty | Rate | Amount | Qty | Rate | Amount | |
1-Jan | 6000 | $8.00 | $48,000.00 | 0 | $0.00 | $0 | 0 | $0.00 | $0 | 6000 | $8.00 | $48,000 |
5-Jan | 6000 | $8.00 | $48,000 | 0 | $0.00 | $0 | 3000 | $8.00 | $24,000 | 3000 | $8.00 | 24000 |
10-Jan | 3000 | $8.00 | $24,000 | 5000 | $9.00 | $45,000 | 0 | $0.00 | $0 | 8000 | $8.63 | $69,000 |
12-Jan | 8000 | $8.63 | $69,000 | 0 | $0.00 | $0 | 2000 | $8.63 | $17,250 | 6000 | $8.63 | $51,750 |
18-Jan | 6000 | $8.63 | $51,750 | 6000 | $10.00 | $60,000 | 0 | $0.00 | $0 | 12000 | $9.31 | $111,750 |
20-Jan | 12000 | $9.31 | $111,750 | 0 | $0.00 | $0 | 4000 | $9.31 | $37,250 | 8000 | $9.31 | $74,500 |
Total | 9000 | $78,500 | 8000 | $74,500 |
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