Question

In: Accounting

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:

  1. Prepare a schedule showing cost of goods sold and ending inventory using weighted average.
  2. Prepare a schedule showing cost of goods sold and ending inventory using First In First Out
  3. 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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