Accounting for inventory using the perpetual system—FIFO, LIFO, and average cost; comparing FIFO, LIFO, and average cost [20-25 min]
Ornamental Iron Works began January with 45 units of iron inventory that cost $24 each. During January, the company completed the following inventory transactions:
Units | Unit Cost | Unit Sale Price | |
Jan 3 Sale............ | 35 | $51 | |
8 Purchase....... | 70 | $32 | |
21 Sale............. | 65 | $73 | |
30 Purchase...... | 25 | $47 |
Requirements
1. Prepare a perpetual inventory record for the inventory using FIFO.
2. Prepare a perpetual inventory record for the inventory using LIFO.
3. Prepare a perpetual inventory record for the inventory using average cost.
4. Determine the company’s cost of goods sold for January using FIFO, LIFO, and average cost.
5. Compute gross profit for January using FIFO, LIFO, and average cost.
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