15-20. 12 pnts Bright Company uses the perpetual inventory system to accountfor
ID: 2458156 • Letter: 1
Question
15-20.
12 pnts
Bright Company uses the perpetual inventory system to accountfor inventories. Information related to Young Company's inventoryat October 31 is given below:
Date
Description
Units #
Unit Dollar amt
Extension
10/01
Beginning Inv
400
$10.00
$4,000.00
10/08
Purchase
800
$10.40
$8,320.00
10/10
Sales
1,000
10/16
Purchase
600
$10.80
$6,480.00
10/22
Sales
700
10/24
Purchase
200
$11.60
$2,320.00
Instructions
1. What is the dollar value of the Ending Inventory and theCost of Goods sold using the following cost assumption for theunits on hand at October 31. Show your work.
Method
Dollar value of
Ending Inventory
10/31
Dollar Value of
Cost of Goods Sold
For month of Oct
FIFO
15.
16.
LIFO
17.
18.
Weighted Average
19.
20.
14. The two inventory costing systems used are the ______________and ______________Explanation / Answer
14) perpetual and periodic :actual cost of inventory is 4000+8320+6480+2320=$ 21120 :
Total available unit cost is $21120 :
The FIFO Method works under the assumption that the firstgoods you bring into the company are the first ones you sell. Thismeans that we would sell the beginning inventory first, followedby any purchases we make, and so on. So, ourendinginventory consists of those units that wemost recently purchased. We have300
units remaining in inventory :FIFO total availabe unitcost 21120 less: ending inventory: 100 units@ 10.80 1080 200units@ 11.60 2320 endinginventory 3400 Cost of goodsold 17720 :
This method assumes that the last items purchased are thefirst to be sold. This means that the items purchased last are thefirst to be sold, followed by the earlier purchases, and soon. Therefore, the units that we have as ending inventory are those unitsthat we first purchased. we have 300 units remaining ininventory :LIFO total availabe unitcost 21120 less ending inventory: 300units @$10.00 3000 endinginventory 3000 Cost of goodsold 18120 :
To calculate the weighted-average, we take the total cost ofthe units, $21120, and divide it by the total number of units,2000. This gives us a value of $10.56 for an average cost of theunits. We then use that cost as the value of the 300 units wehave on hand.
:W AVG total availabe unitcost 21120 less ending inventory: 300units @10.56 3168 endinginventory 3168 Cost of goodsold 17952 total availabe unitcost 21120 less ending inventory: 300units @10.56 3168 endinginventory 3168 Cost of goodsold 17952
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