Question

4) A company reports the following transactions for its fishing rods for the month of April. They use a perpetual inventory system Units Unit Cost $325 $350 Date April 1 April 6 April 9 April 14 April 20 April 28 Explanation Inventory Purchase Sale Purchase Sale Purchase $355 $360 a) Identify the Cost of Goods Sold and Ending Inventory under FIFO (6 marks) b) Identify the Cost of Goods Sold and Ending Inventory under average costing (6 marks) c) Under average costing the ending inventory counted 35 rods. Do the journal entry to correct the ending inventory. (4 marks)

Answer 1

under FIFO the goods purchased first are sold forst The sales will be out of opening stock and first purchases. cost of goods sold = (45% 8325) cost of goods sold = (5x325)+(25x350) 1625 +8750 $10375 cost of goods sold = 125000 Total rost of Ending inventory. - Number of units in ending inventory is 40. =) (20x355) + (20x360) = 7100 + 7200 $14300 Under Average cost method average cost / unit = 39300 115 units - $341.74 Cuart cost of goods sold = 75 × $341.74 cost of $25630.5 Ending inventory = 40X 341.74 $ 13669.5 $ 1708.7 Entry & Την coste goods sold $17067 (5X341.74).