Question

Page 2 2 B Superior Painting is a sole proprietorship owned by Bob Simmons who purchases is for home restoration Below are Bob's transactions for the month of May 2014 • May 1" Began the month with 10-tins of paints valued at $7 pertin • May 5" Purchased 15-tins of paints at $8 pertin May 15" Purchased 10-tins of paints at $10 pertin • May 25 Purchased 20 tons of paints at $11 pertin. On May 30 Bob counted 15-tins of paints remaining in the warehouse Instructions: Using the Periodic Method of inventory Cost Flow, Please Calculate the following: a. Cost of Goods Available for Sales (GAF) in Units and dollar (20%) b. Cost of Goods Sold and Ending Inventory in Dollars using FIFO (205) Date Description Unit Unit Cost GAFS

Answer 1

Question a :-

Periodic inventory system is the system wherein the amount reflecting in the Inventory account is not updated when purchases of materials are made from suppliers, but, the Inventory account is commonly updated only once (ideally at the end of the Period).

Therefore the Cost of goods available for sales in Units and Dollar is as Under:-

Date	Quantity (Tins)	Rate per Unit (Tin)	Total Value
May 1 (Opening stock)	10	$7.00	$70.00
May 5th	15	$8.00	$120.00
May 15th	10	$10.00	$100.00
May 25th	20	$11.00	$220.00
Total	55	$9.27	$510.00
Closing Stock (Given)	15	$9.27 ($139.09 / 15 Tins)	$139.09

Question b :-

Date	Quantity (Tin )	Rate per Unit (Tin)	Total Value
May 1 (Opening stock)	10	$7.00	$70.00
May 5th	15	$8.00	$120.00
May 15th	10	$10.00	$100.00
May 25th	20	$11.00	$220.00
Total	55
Sales	40	15 Tins purchased on 25th May left as per the FIFO Method of Inventory system, because all the items are sold on first in first out basis
Cost of Goods Sold	= $70 + $120 + $100 + $55 = $ 345
Closing Stock (Given)	15	$11.00	$165.00

Thanks and Regards