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

1FIFO, Periodic Method:

Closing Units5000

Closing Units must be from Last Units:

DateUnitsRateAmt

Jan.1840008.0032000

Jan.1010007.007000

5000 39000

Total Cost of Opening + Purchases1100077000

Less: Closing Units500039000

Cost of Goods Sold600038000

2LIFO, Periodic Method:

Closing Units5000

Closing Units must be from Opening Units and First Purchases:

DateUnitsRateAmt

Opening40006.0024000

Jan.1010007.007000

5000 31000

Total Cost of Opening + Purchases1100077000

Less: Closing Units500031000

Cost of Goods Sold600046000

3LIFO, Perpetual Method:

DatePurchasesSalesBalance

UnitsPUTotal CostUnitsPUTotal CostUnitsPUTotal Cost

Beginning Inventory      40006.0024000

          

Jan.5   20006.001200020006.0012000

          

Jan.1030007.0021000   20006.0012000

       30007.0021000

          

Jan.12   10007.00700020006.0012000

       20007.0014000

          

Jan.1840008.0032000   20006.0012000

       20007.0014000

       40008.0032000

          

Jan.20   30008.002400020006.0012000

       20007.0014000

       10008.008000

          

Total11000 770006000 430005000 34000

COGSEnding In

4Average Cost, Periodic Method:

Closing Units5000

Average Cost Calculation:

DateUnitsRateAmt

Open40006.0024000

Jan.1030007.0021000

Jan.1840008.0032000

110007.0077000

(77000/11000)

Closing Units500035000

Cost of Goods Sold600042000

5Average Cost, Perpetual Method:

DatePurchasesSalesBalance

UnitsPUTotal CostUnitsPUTotal CostUnitsPUTotal Cost

Beginning Inventory      40006.0024000

          

Jan.5   20006.001200020006.0012000

          

Jan.1030007.0021000   50006.6033000

        (33000/5000)

          

Jan.12   10006.60660040006.6026400

          

Jan.1840008.0032000   80007.3058400

        (58400/8000)

          

Jan.20   30007.302190050007.3036500

          

Total11000 770006000 405005000 36500

COGSEnding In