Question

During August, the receipts and distributions of Material No. B4G9 are as follows:
Received
Aug. 3 1,100 units at $15
16 1,700 units at $17
29 900 units at $18
Issued
Aug. 11 700 units for Job No. 116
18 1,900 units for Job No. 117
30 800 units for Job No. 118
(A) Determine the cost of each of the three issues under a perpetual system, using the
first-in, first-out method.
B)Using perpetual costing procedures, determine (1) cost of the year-end inventory
and, (2) cost of goods sold relating to this product under the moving average method
(C) Present the journal entry to record the issuance of the materials for the month,
assuming that the cost of issuances is determined by the first-in, first-out method.

Answer 1

Requirement #1 A:-

​​​​​​Determine the cost of each of the three issues under a perpetual system, using the
first-in, first-out method.

Aug. 11	issue:	700 × $15	$10,500
18	issue:	(400 × $15) + (1,500 × $17)	31,500
30	issue:	(200 × $17) + (600 × $18)	14,200
			$56,200

Requirement #1 B:-

Using perpetual costing procedures, determine (1) cost of the year-end inventory:

Aug. 31

Ending inventory:

300 units × $18

$5400

Requirement#2:-

Cost of goods sold relating to this product under the moving average method

		Received				Issue			Balance
Date	Quantity	Unit Cost	Total Cost		Qunatity	Unit Cost	Total Cost	Quantity	Avg.Unit Cost	Total Cost
Aug 3	1100	$15	$16500					1100	$15	$16500
Aug 11					700	$15	$10500	400	$15	$6000
Aug 16	1700	$17	$28900					2100	$16.619	$34900
Aug 18					1900	$16.619	$31576	200	$16.619	$3324
Aug 29	900	$18	$16200					1100	$17.749	$19524
Aug 30					800	$17.749	$14199	300	$17.749	$5325
Aug 31 (Total)							$56275

Cost of Good sold under Moving Average Method

=$56275

Note:- Average unit cost are rounded off upto 3 decimal Place and Final value are rounded off to nearest whole dollars.

Requirement #3:-Present the journal entry to record the issuance of the materials for the month,
assuming that the cost of issuances is determined by the first-in, first-out method.

Date	Accounts and Explanations	Debit$	Credit$
Aug 11	Work in Progress -Job 116	10,500
	Inventory		10,500
	(To record issuance for Job 116
Aug 18	Work in Progress -Job 117	31500
	Inventory		31500
	(To record issuance for Job 117)
Aug 30	Work in Progress -Job 118	14200
	Inventory		14200
	(To record issuance for Job 118)

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