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Question 6 Jackpot Limited uses a perpetual inventory system. Inventory data for the year ended December...
Question 6
Jackpot Limited uses a perpetual inventory system. Inventory data for the year ended December 31, 2019, are as follows:
Beginning inventory 35 units at $130 each
February 28 purchase 25 units at $145 each
1st quarter sales 40 units
July 31 purchase 45 units at $115 each
2nd quarter sales 55 units
October 31 purchase 60 units at $125 each
Required
Determine the amounts to report for Cost of Goods Sold and Ending inventory using FIFO and the weighted-average cost method.
Solutions
Expert Solution
Calculation of Cost of Goods Sold and Ending inventory using perpetual inventory system is as follows:
FIFO:
| Date | Number of Units Purchased | Cost per Unit | Purchase Cost | Number of Units Sold | Cost per Unit | Cost of Goods Sold | Number of Units Balance | Cost per Unit | Inventory Balance |
| 35 | $ 130.00 | $ 4,550.00 | |||||||
| February 28 | 25 | $ 145.00 | $ 3,625.00 | 35 | $ 130.00 | $ 4,550.00 | |||
| 25 | $ 145.00 | $ 3,625.00 | |||||||
| 1st Quarter | 35 | $ 130.00 | $ 4,550.0 | 20 | $ 145.00 | $ 2,900.00 | |||
| 5 | $ 145.00 | $ 725.0 | |||||||
| July 31 | 45 | $ 115.00 | $ 5,175.00 | 20 | $ 145.00 | $ 2,900.00 | |||
| 45 | $ 115.00 | $ 5,175.00 | |||||||
| 2nd Quarter | 20 | $ 145.00 | $ 2,900.00 | 10 | $ 115.00 | $ 1,150.00 | |||
| 35 | $ 115.00 | $ 4,025.00 | |||||||
| October 31 | 60 | $ 125.00 | $ 7,500.00 | 10 | $ 115.00 | $ 1,150.00 | |||
| 60 | $ 125.00 | $ 7,500.00 | |||||||
| Total | 130 | $ 16,300.00 | 95 | $ 12,200.0 | 70 | $ 8,650.00 |
As per above table,
Cost of Goods Sold is $ 12,200
Ending Inventory is $ 8,650
Weighted-average cost method:
| Date | Number of Units Purchased | Cost per Unit | Purchase Cost | Number of Units Sold | Cost per Unit | Cost of Goods Sold | Number of Units Balance | Cost per Unit | Inventory Balance |
| 35 | $ 130.00 | $ 4,550.00 | |||||||
| February 28 | 25 | $ 145.00 | $ 3,625.00 | 35 | $ 130.00 | $ 4,550.00 | |||
| 25 | $ 145.00 | $ 3,625.00 | |||||||
| 60 | $ 136.25 | $ 8,175.00 | |||||||
| 1st Quarter | 40 | $ 136.25 | $ 5,450.0 | 20 | $ 136.25 | $ 2,725.00 | |||
| July 31 | 45 | $ 115.00 | $ 5,175.00 | 20 | $ 136.25 | $ 2,725.00 | |||
| 45 | $ 115.00 | $ 5,175.00 | |||||||
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