You are provided with the following information for Barton Inc. Barton Inc. uses
ID: 2567713 • Letter: Y
Question
You are provided with the following information for Barton Inc. Barton Inc. uses the periodic method of accounting for its inventory transactions.
Calculate the value of ending inventory that would be reported on the balance sheet, under each of the following cost flow methods (show work).
March 1 Beginning inventory 1,945 liters at a cost of 59¢ per liter. March 3 Purchased 2,570 liters at a cost of 64¢ per liter. March 5 Sold 2,270 liters for $1.14 per liter. March 10 Purchased 3,855 liters at a cost of 69¢ per liter. March 20 Purchased 2,555 liters at a cost of 77¢ per liter. March 30 Sold 5,195 liters for $1.27 per liter.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) Value of Ending Inventory (Specific Identification method)
Specific Identification (Periodic)
Units
$/Unit
$$
Beginning Inventory
1945
$0.59
$1,148
Purchases
March.3
2570
$0.64
$1,645
March.10
3855
$0.69
$2,660
March.20
2555
$0.77
$1,967
Goods Available for Sale (A)
10925
$7,420
Cost of Goods Sold:
Units Sold from Beginning Inventory
1410
$0.59
$832
Units Sold from Purchases March.3
1790
$0.64
$1,146
Units Sold from Purchases March.10
2845
$0.69
$1,963
Units Sold from Purchases March.20
1420
$0.77
$1,093
Total Cost of Goods Sold (B)
7465
$5,034
Ending Inventory (A - B)
3460
$2,386
Value of Ending Inventory (Specific Identification Method) = $2,386
2) First in First Out method (FIFO) - Periodic
FIFO method says the oldest units in stock are issued or sold first.
FIFO (Periodic)
Units
$/Unit
$$
Beginning Inventory
1945
$0.59
$1,148
Purchases
March.3
2570
$0.64
$1,645
March.10
3855
$0.69
$2,660
March.20
2555
$0.77
$1,967
Goods Available for Sale (A)
10925
$7,420
Cost of Goods Sold:
Units Sold from Beginning Inventory
1945
$0.59
$1,148
Units Sold from Purchases March.3
2570
$0.64
$1,645
Units Sold from Purchases March.10
2950
$0.69
$2,036
Units Sold from Purchases March.20
0
$0.00
$0
Total Cost of Goods Sold (B)
7465
$4,828
Ending Inventory (A - B)
3460
$2,592
Value of Ending Inventory (FIFO-Periodic) = $2,592
2) Last in First Out (LIFO) - Periodic
LIFO method says the newest units in stock are issued or sold first.
LIFO (Periodic)
Units
$/Unit
$$
Beginning Inventory
1945
$0.59
$1,148
Purchases
March.3
2570
$0.64
$1,645
March.10
3855
$0.69
$2,660
March.20
2555
$0.77
$1,967
Goods Available for Sale (A)
10925
$7,420
Cost of Goods Sold:
Units Sold from Beginning Inventory
0
$0
Units Sold from Purchases March.3
1055
$0.64
$675
Units Sold from Purchases March.10
3855
$0.69
$2,660
Units Sold from Purchases March.20
2555
$0.00
$0
Total Cost of Goods Sold (B)
7465
$3,335
Ending Inventory (A - B)
3460
$4,085
Ending Inventory = $4,085
Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you
Specific Identification (Periodic)
Units
$/Unit
$$
Beginning Inventory
1945
$0.59
$1,148
Purchases
March.3
2570
$0.64
$1,645
March.10
3855
$0.69
$2,660
March.20
2555
$0.77
$1,967
Goods Available for Sale (A)
10925
$7,420
Cost of Goods Sold:
Units Sold from Beginning Inventory
1410
$0.59
$832
Units Sold from Purchases March.3
1790
$0.64
$1,146
Units Sold from Purchases March.10
2845
$0.69
$1,963
Units Sold from Purchases March.20
1420
$0.77
$1,093
Total Cost of Goods Sold (B)
7465
$5,034
Ending Inventory (A - B)
3460
$2,386
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