Aranas Manufacturing, a tool retailer, began year 20x7 with 21,500 units of product in its January 1 inventory, at a cost of $12.50 for each unit. It made successive purchases of its product in year 20x7, as follows. The company uses a periodic inventory system. On December 31, 20x7, a physical count reveals that 35,000 units of its product remain in inventory.
Mar. 7 |
25,000 units |
@ $16 each |
May 25 |
41,500 units |
@ $19 each |
Aug. 1 |
22,750 units |
@ $23 each |
Nov. 10 |
38,100 units |
@ $24 each |
Instructions
Using the template provided below.
FIFO | |||||||||
RECEIPTS | ISSUES | BALANCE (AVAILABLE FOR SALE) | |||||||
Date | Qty | Rate | Amount | Qty | Rate | Amount | Qty | Rate | Amount |
01/01/19 | 21500 | 12.50 | 268750 | ||||||
07/03/19 | 25000 | 16 | 400000 | ||||||
25/05/19 | 41500 | 19 | 788500 | ||||||
01/08/19 | 22750 | 23 | 523250 | ||||||
10/11/19 | 38100 | 24 | 914400 | ||||||
21500 | 12.50 | 268750 | |||||||
25000 | 16 | 400000 | |||||||
41500 | 19 | 788500 | |||||||
22750 | 23 | 523250 | |||||||
3100 | 24 | 74400 | |||||||
35000 | 24 | 840000 | |||||||
Total | 113850 | 2054900 | 35000 | 24 | 840000 | ||||
LIFO | |||||||||
RECEIPTS | ISSUES | BALANCE (AVAILABLE FOR SALE) | |||||||
Date | Qty | Rate | Amount | Qty | Rate | Amount | Qty | Rate | Amount |
01/01/19 | 21500 | 12.5 | 268750 | ||||||
07/03/19 | 25000 | 16 | 400000 | ||||||
25/05/19 | 41500 | 19 | 788500 | ||||||
01/08/19 | 22750 | 23 | 523250 | ||||||
10/11/19 | 38100 | 24 | 914400 | ||||||
11500 | 16 | 184000 | |||||||
41500 | 19 | 788500 | |||||||
22750 | 23 | 523250 | |||||||
38100 | 24 | 914400 | |||||||
13500 | 16 | 216000 | |||||||
21500 | 12.50 | 268750 | |||||||
Total | 113850 | 2410150 | 35000 | 484750 | |||||
WAM | |||||||||
RECEIPTS | ISSUES | BALANCE (AVAILABLE FOR SALE) | |||||||
Date | Qty | Rate | Amount | Qty | Rate | Amount | Qty | Rate | Amount |
01/01/19 | 21500 | 12.50 | 268750 | ||||||
07/03/19 | 25000 | 16 | 400000 | 46500 | 14.38 | 668750 | |||
25/05/19 | 41500 | 19 | 788500 | 88000 | 16.56 | 1457250 | |||
01/08/19 | 22750 | 23 | 523250 | 110750 | 17.88 | 1980500 | |||
10/11/19 | 38100 | 24 | 914400 | 148850 | 19.45 | 2894900 | |||
113850 | 19.45 | 2214205 | |||||||
Total | 113850 | 2214205 | 35000 | 19.45 | 680695 |
The average cost method may be applied during periods of price fluctuations and it is better method where numerous production process are involved in manufacturing companies.
The method which is most suitable, is the one which should be applied consistently year after year.
Aranas Manufacturing, a tool retailer, began year 20x7 with 21,500 units of product in its January...
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