Question

In: Accounting

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

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