Perpetual Inventory System and Inventory Costing Methods The inventory of Wood4F
ID: 2499248 • Letter: P
Question
Perpetual Inventory System and Inventory Costing Methods
The inventory of Wood4Fun and data on purchases and sales for a two-month period follow. The company closes its books at the end of each month. It uses the perpetual inventory system.
In preparing the solutions, it is helpful to determine the balance of inventory after each transaction, as shown in the Business Insight: Concepts and Applications feature in this chapter.
Determine the cost of ending inventory and cost of goods sold for April and May using the average-cost method. Round unit costs to two decimal places and round the final answers to the nearest dollar. Enter all amounts as positive numbers.
1. Determine Cost of Ending Inventory for April and May using the FIFO Method
Apr. 1 Beginning inventory 50 units @ $204 10 Purchase 100 units @ $220 17 Sale 90 units 30 Ending inventory 60 units May 2 Purchase 100 units @ $216 14 Purchase 50 units @ $224 22 Purchase 60 units @ $234 30 Sale 200 units 31 Ending inventory 70 unitsExplanation / Answer
Answer: Calculation of the Cost of Ending Inventory for April and May using the FIFO Method:
April: 60 units@ $220=$13200
May: 70 units :
10 units @ $224=$2240
60 units @ $234=$14040
Total=$16280
Answer: Calculation of the cost of ending inventory and cost of goods sold for April and May using the average-cost method.
Calculation of average cost:
April=214.67
May=221.1852
COGS : april=90*214.67=$19320.3
MAy=200 units*221.1852=$44237.04
Cost of ending inventory:
April=60*214.67=$12880.2
MAy=70 units*221.1852=$15482.964
Apr. 1 Beginning inventory 50 units @ $204 10200 10 Purchase 100 units @ $220 22000 Average cost 150 32200 214.6667 opening 60 @ 214.6667 12880 2-May Purchase 100 units @ $216 21600 14 Purchase 50 units @ $224 11200 22 Purchase 60 units @ $234 14040 May Average cost 270 59720 221.1852Related Questions
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