Jaywall Corporation, which uses a perpetual inventory system, recorded the following inventory transactions during 20X3. ...

Jaywall Corporation, which uses a perpetual inventory system, recorded the following inventory transactions during 20X3.


		Units	Unit Cost	Units	Selling Price
April 1	Beginning inventory	45	$8
25	Purchase	150	9
May 4	Purchase	65	10
16	Sale			120	$16
June 4	Purchase	50	12

(a) Using the FIFO cost formula, calculate the amount of the cost of goods sold for the quarter ended June 30. (Show calculations)
(b) Using the average cost formula, calculate the amount of ending inventory at June 30. (Show calculations)

Solutions

Expert Solution

Answer to a) COGS = $1035

Going by the FIFO method, Jaywall corporation needs to go by the older costs (of acquiring his inventory) first.

Jaywall corporation's, COGS is as follows

45*$8 + 75*$9 = $1035

Answer to b) Closing Stock = $1871

	Purchases	Sales	Balance
Date	Units	Unit Cost	Total	Units	Unit Cost	Total	Units	Unit Cost
01-Apr							45	$ 8.00
25-Apr	150	$ 9.00	$ 1,350.00				45	$ 8.00
							150	$ 9.00
							195	$ 8.77
04-May	65	$ 10.00	$ 650.00				195	$ 8.77
							65	$ 10.00
							260	$ 9.08
16-May				120	$ 9.08	$ 1,089.12	140	$ 9.08
04-Jun	50	$ 12.00	$ 600.00				140	$ 9.08
							50	$ 12.00
							190	$ 9.85

ekkarill92 answered 1 year ago

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