*urgent* A company just starting business made the following four inventory purc
ID: 2567090 • Letter: #
Question
*urgent* A company just starting business made the following four inventory purchases and two sale events in June: PerUnitTotal Units sold $4.00 June 1 200 units $800 Sale... 120 units June 10 400 units 6.00 2,400 Sale.u 380 units June 15 June 28 100 units 100 units 800 units 8.00 10.00 800 1,000 $5,000 A physical count of the merchandise on June 30 reveals that 300 units remain in ending inventory (500 units have been sold) PERIODIC METHOD, calculate the Cost of goods sold and Ending inventory value using FIFO, uFO, and average cost 1. FIFO 2. LIFO 3. Average Cost PERPETUAL METHOD, what is the CGS &El; for Average Costing or LIFO (Do just one).Explanation / Answer
Solution:
Periodic Inventory System
It is a system of inventory in which inventories are updated on a periodic basis. Periodic basis may be monthly, quarterly, weekly, half yearly or yearly. In this system, inventories are not kept up to date.
1) First in First Out method (FIFO) - Periodic
FIFO method says the oldest units in stock are issued or sold first.
FIFO (Periodic)
Units
$/Unit
$$
Purchase June 1
200
$4.00
$800
Purchase June 10
400
$6.00
$2,400
Purchase June 15
100
$8.00
$800
Purchase June 28
100
$10.00
$1,000
Goods Available for Sale (A)
800
$5,000
Cost of Goods Sold:
Units Sold from Purchase June 1
200
$4.00
$800
Units from 2/4 Purchases
300
$6.00
$1,800
Total Cost of Goods Sold (B)
500
$2,600
Ending Inventory (A - B)
300
$2,400
COGS = $2,600
Ending Inventory = $2,400
2) Last in First Out (LIFO) - Periodic
LIFO method says the newest units in stock are issued or sold first.
LIFO (Periodic)
Units
$/Unit
$$
Purchase June 1
200
$4.00
$800
Purchase June 10
400
$6.00
$2,400
Purchase June 15
100
$8.00
$800
Purchase June 28
100
$10.00
$1,000
Goods Available for Sale (A)
800
$5,000
Cost of Goods Sold:
Units Sold from Purchase June 28
100
$10.00
$1,000
Units Sold from Purchase June 15
100
$8.00
$800
Units Sold from Purchase June 10
300
$6.00
$1,800
Total Cost of Goods Sold (B)
500
$3,600
Ending Inventory (A - B)
300
$1,400
COGS = $3,600
Ending Inventory = $1,400
3) Average Cost
Average Cost Method
Under average cost method, the average cost per unit is calculated and the calculated average cost is applied to the units sold in order to find out cost of goods sold.
Average Unit Cost = Total Cost of material available for sale / total quantity of material available for sale
Cost of Goods Sold = Sold Units x Average Unit Cost
Total Cost of material available for sale = $5,000
Total Units available for sale = 800 Units
Average Cost per unit = $5,000 / 800 Units = $6.25 Per Unit
Cost of Goods Sold = Total Units Sold 500 Units x Average Cost per unit $6.25 = $3,125
Ending Inventory = Total Cost of material available for sale – Cost of Goods Sold = $5,000 - $3,125 = $1,875
Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you
Pls ask separate question for remaining part.
FIFO (Periodic)
Units
$/Unit
$$
Purchase June 1
200
$4.00
$800
Purchase June 10
400
$6.00
$2,400
Purchase June 15
100
$8.00
$800
Purchase June 28
100
$10.00
$1,000
Goods Available for Sale (A)
800
$5,000
Cost of Goods Sold:
Units Sold from Purchase June 1
200
$4.00
$800
Units from 2/4 Purchases
300
$6.00
$1,800
Total Cost of Goods Sold (B)
500
$2,600
Ending Inventory (A - B)
300
$2,400
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