1. In a perpetual inventory system, beginning inventory, purchases, and sales fo
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Question
1. In a perpetual inventory system, beginning inventory, purchases, and sales for an item are as follows: ( Please, explain in details)
a- Using the FIFO method, calculate the cost of merchandise sold on April 26th:
b- Using the FIFO method, calculate the cost of inventory on April 30th:
c- Using the weighted average method, calculate the cost of merchandise sold on April 26th:
d- Using the weighted average method, calculate the per unit cost of ending inventory and round your answer to two decimal places:
e- Using the LIFO method, calculate the cost of merchandise sold on April 26th:
f- Using the LIFO method, calculate the cost of inventory on April 30th:
April 1 Inventory 62 units at $ 20 April 10 Sale 52 units April 17 Purchase 40 units at $ 19 April 26 Sale 45 units April 28 Purchase 54 units at $ 20.50Explanation / Answer
a. Cost of merchandise sold on April 26th as per FIFO method is $865
b. Cost of inventoryon April 30th as per FiFO is $1,202
c. Cost of merchandise osld on April 26th as per Weighted average method is $864
d. Per unit cost of ending inventory as per Weighted average method is $20.39
e. Cost of merchandise sold on April 26th as per LIFO method $860
f. Cost of inventory on April 30th as per LIFO method is $1,207
WORKING NOTES:
STORES LEDGER AS PER FIFO:
______________________________________________________________________________________
DATE PURCHASE SALE BALANCE
QTY RATE AMT QTY RATE AMT QTY RATE AMT
APRIL 1 62 20 1,240
APRIL 10 - - - 52 20 1,0140 10 20 200
APRIL 17 40 19 760 - - - 10 20 200
40 19 760
APRIL 26 - - - 10 20 200
35 19 665 5 19 95
APRIL 28 54 20.50 1,107 - - - 5 19 95
54 20.50 1,107
FIFO : When inventory sold issue first earlist units and apply the price of those units
Cost of merchandise sold on April 26th = $200 + 665 = $865
Cost of inventory on April 30th = $95+1,107 = $1,202
2. STORES LEDGER AS PER WEIGHTED AVERAGE METHOD :
_______________________________________________________________________________________-
DATE PURCHASE SALE BALANCE
QTY RATE AMT QTY RATE AMT QTY RATE AMT
ARIL 1 62 20 1,240
APRIL 10 52 20 1,040 10 20 200
APRIL17 40 19 760 - - - 50 19.20 960
APRIL 26 - - - 45 19.40 864 5 19.2 96
APRIL 28 54 20.50 1,107 - - - 59 20.39 1,203
NOTE; 1. Every time, to find unit rate,divide total amount by total units in the balance column
Cost of inventory sold on April 2th = $864
Cost of inventory on April 30th = $1,203
3. STORES LEDGER UNDER LIFO:
________________________________________________________________________________________-
DATE PURCHASSE SALE BALANCE
QTY RATE AMT QTY RATE AMT QTY RATE AMT
APRIL 1 62 20 1,240
APRIL 10 - - - 52 20 1,040 10 20 200
APRIL 17 40 19 760 - - - 10 20 200
40 19 760
APRIL 26 - - - 40 19 760 - - -
5 20 100 5 20 100
APRIL 30 54 20.50 1,107 - - - 5 20 100
54 20.50 1,107
NOTE: 1. Under LIFO inventroy is sold from latest units purchase,so earliest units will be the closing inventory
2. Cost of inventory sold on April 26 will be $760+100 = $860
3. Cost of closing inventory on April 30th will be $100+1,107 = $ 1,207
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