Question

4.)

Mojo Industries tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the time of each sale, as if it uses a perpetual inventory system. Assume its accounting records provided the following information at the end of the accounting period, January 31. The inventory’s selling price is $10 per unit.

Transactions	Unit Cost			Units			Total Cost
Inventory, January 1	$	3.50			330		$	1,155
Sale, January 10					(240	)
Purchase, January 12		4.00			360			1,440
Sale, January 17					(190	)
Purchase, January 26		5.00			100			500

Required:
1-a.	Calculate the cost of goods sold and ending inventory for Mojo Industries assuming it applies the LIFO cost method perpetually at the time of each sale.

1-b.	Does the use of a perpetual inventory system result in a higher or lower cost of goods sold than the periodic inventory system when costs are rising?
	Lower Cost of Goods Sold Higher Cost of Goods Sold

Answer 1

working Table
Purchases				Cost of good sold			Ending Inventory
Date	Units purchased	Cost per unit	Total cost	Units sold	Cost per unit	Cost of good sold	Balance units	Cost per unit	Ending inventory
Inventory, Jan 1							330	$3.50	$1,155
Sale, January 10				240	$3.50	$840
Purchases jan 12	360	4	$1,440				90	$3.50	$315
							360	4	$1,440
Sale Jan 17				190	4	$760	90	3.5	315
							170	4	$680
							260		995
Purcahses Jan 26	100	5	$500				90	3.5	315
							170	4	680
							100	5	$500
Total				430		1600	360		1495
Ans 1a
As per LIFo method	in $
Cost of good sold	1600
Ending Inventory	1495
ans 1b
If LIFO method is used than cost of good sold under perpetual inventory system would be less than in period system
Lower cost of good sold under perrpetual system
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