During January, a company that uses a perpetual inventory system had beginning inventory, purchases, and sales...

During January, a company that uses a perpetual inventory system had beginning inventory, purchases, and sales as follows :

		Units	Cost per unit
	Begin Inventory	100	12
Jan 5	Sale	50
10	Purchase	70	16
15	Sale	25
25	Sale	35

Required:

Prepare a schedule showing cost of goods sold and ending inventory using weighted average.
Prepare a schedule showing cost of goods sold and ending inventory using First In First Out
Compute gross profit under for a and b. Selling price for items is $50 pet unit.

Solutions

Expert Solution

FIFO: Under the FIFO method, it is assumed that the goods purchased first are the goods sold first. So the ending inventory would represent the goods purchased later in point of time.
Weighted average: Under the weighted average cost method, weighted average cost per unit is found for units available for sale and the weighted average cost arrived is used to calculate ending inventory and cost of goods sold.

ekkarill92 answered 1 year ago

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