Question

Ferris Company began 2018 with 4,000 units of its principal product. The cost of each unit is $6. Merchandise transactions for the month of January 2018 are as follows:

	Purchases
Date of Purchase	Units		Unit Cost*			Total Cost
Jan. 10	3,000		$	7			$	21,000
Jan. 18	4,000			8				32,000
Totals	7,000							53,000

*Includes purchase price and cost of freight.

Sales
Date of Sale	Units
Jan. 5	2,000
Jan. 12	1,000
Jan. 20	3,000
Total	6,000

5,000 units were on hand at the end of the month.

Required:
Calculate January's ending inventory and cost of goods sold for the month using each of the following alternatives:
1. FIFO, periodic system.
2. LIFO, periodic system.
3. LIFO, perpetual system.
4. Average cost, periodic system.
5. Average cost, perpetual system.

Answer 1

• All working forms part of the answer
• Requirement:

	Cost of Ending Inventory	Cost of Goods Sold
FIFO, periodic	$ 39,000	$ 38,000
LIFO, periodic	$ 31,000	$ 46,000
LIFO, perpetual	$ 34,000	$ 43,000
Average Cost, Periodic	$ 35,000	$ 42,000
Average Cost, Perpetual	$ 36,500	$ 40,500

• Working

---FIFO Periodic

FIFO	Cost of Goods available for sale			Cost of Goods Sold			Ending Inventory
	Units	Cost/unit	COG for sale	Units sold	Cost/unit	COGS	Units	Cost/unit	Ending inventory
Beginning Inventory	4000	$                   6.00	$                      24,000.00	4000	$           6.00	$        24,000.00	0	$           6.00	$                         -
Purchases:
10-Jan	3000	$                   7.00	$                      21,000.00	2000	$           7.00	$        14,000.00	1000	$           7.00	$            7,000.00
18-Jan	4000	$                   8.00	$                      32,000.00	0	$           8.00	$                        -	4000	$           8.00	$          32,000.00
TOTAL	11000		$                      77,000.00	6000		$        38,000.00	5000		$          39,000.00

---LIFO Periodic

LIFO	Cost of Goods available for sale			Cost of Goods Sold			Ending Inventory
	Units	Cost/unit	COG for sale	Units sold	Cost/unit	COGS	Units	Cost/unit	Ending inventory
Beginning Inventory	4000	$                   6.00	$                      24,000.00	0	$           6.00	$                        -	4000	$           6.00	$          24,000.00
Purchases:
10-Jan	3000	$                   7.00	$                      21,000.00	2000	$           7.00	$        14,000.00	1000	$           7.00	$            7,000.00
18-Jan	4000	$                   8.00	$                      32,000.00	4000	$           8.00	$        32,000.00	0	$           8.00	$                         -
TOTAL	11000		$                      77,000.00	6000		$        46,000.00	5000		$          31,000.00

---LIFO, perpetual

Schedule of Cost of Merchandise Sold
LIFO METHOD
Date	Quantity Purchased	Purchases Unit Cost	Purchases Total Cost	Quantity Sold	Cost of Merchandise Sold Unit Cost	Cost of Merchandise Sold Total Cost	Inventory Quantity	Inventory Unit Cost	Inventory Total Cost
Beginning							4000	$         6.00	$             24,000.00
Jan-05				2000	6	$        12,000.00	2000	$         6.00	$             12,000.00
Jan-10	3000	$              7.00	$    21,000.00				2000	$         6.00	$             12,000.00
							3000	$         7.00	$             21,000.00
Jan-12				1000	$         7.00	$          7,000.00	2000	$        6.00	$             12,000.00
							2000	$         7.00	$             14,000.00
Jan-18	4000	$              8.00	$    32,000.00				2000	$         6.00	$             12,000.00
							2000	$         7.00	$             14,000.00
							4000	$         8.00	$             32,000.00
Jan-20				3000	$         8.00	$        24,000.00	2000	$         6.00	$             12,000.00
							2000	$         7.00	$             14,000.00
							1000	$         8.00	$               8,000.00
Balance	7000		$    53,000.00	6000		$        43,000.00	5000		$             34,000.00

---Average Cost Periodic

Weighted Average (Periodic)	Units	Cost per unit	Total
Beginning Inventory	4000	$       6.00	$     24,000.00
Purchases:
10-Jan	3000	$       7.00	$     21,000.00
18-Jan	4000	$       8.00	$     32,000.00
Total Purchases	7000		$     53,000.00
Goods Available for Sales	11000		$     77,000.00
Weighted Average cost per unit		$       7.00
Cost of Goods Sold	6000	$       7.00	$     42,000.00
Ending Inventory	5000	$       7.00	$     35,000.00

--- Average Cost, Perpetual

Schedule of Cost of Merchandise Sold
Weighted Average
Date	Quantity Purchased	Purchases Unit Cost	Purchases Total Cost	Quantity Sold	Cost of Merchandise Sold Unit Cost	Cost of Merchandise Sold Total Cost	Inventory Quantity	Inventory Unit Cost	Inventory Total Cost
Jan-01							4000	$               6.00	$     24,000.00
Jan-05			$                       -	2000	$        6.00	$     12,000.00	2000	$               6.00	$     12,000.00
Jan-10	3000	$    7.00	$          21,000.00			$                 -	5000	$               6.60	$     33,000.00
Jan-12			$                       -	1000	$        6.60	$       6,600.00	4000	$               6.60	$     26,400.00
Jan-18	4000	$    8.00	$          32,000.00			$                 -	8000	$               7.30	$     58,400.00
Jan-20			$                       -	3000	$        7.30	$     21,900.00	5000	$               7.30	$     36,500.00
Dec-31	Balances		$          53,000.00	6000		$     40,500.00	5000		$     36,500.00