In: Accounting
Periodic and Perpetual Systems—Calculating Ending Inventory and Cost of Sales using Average Cost (Moving Average), FIFO, and LIFO
Undew Inc.’s inventory records showed the following data for an item it sells regularly.
Date | Units | Unit Cost | |
---|---|---|---|
Jan 1 | Inventory | 2,000 | $10.00 |
Jan 3 | Purchases | 18,000 | 10.40 |
Jan 7 | Sales (at $26 per unit) | 7,000 | |
Jan 20 | Purchases | 6,000 | 11.00 |
Jan 22 | Sales (at $27 per unit) | 16,000 | |
Jan 30 | Purchases | 3,000 | 12.00 |
a. Assuming that Undew maintains a periodic inventory system, compute ending inventory and cost of goods sold for the month-ended January 31 using (1) average cost, (2) FIFO, and (3) LIFO.
Note: Round your final answers only to the nearest dollar.
Note: Do not round the cost per unit amounts in your calculations.
Perpetual Inventory System | Ending Inventory | COGS |
---|---|---|
1. Average cost method. | ||
2. FIFO method. | ||
3. LIFO method. |
b. Assuming that Undew maintains a perpetual inventory system, compute ending inventory and cost of goods sold for the month-ended January 31 using (1) moving average, (2) FIFO, and (3) LIFO.
Note: Round your final answers only to the nearest dollar.
Note: Do not round the cost per unit amounts in your calculations.
Perpetual Inventory System | Ending Inventory | COGS |
---|---|---|
1. Moving average method. | ||
2. FIFO method. | ||
3. LIFO method. |
a) Periodic System
Weighted Average
Average cost per unit = $309,200 / 29000 = $10.66
Ending inventory = 6000 x $10.66 = $63,972
Cost of Goods sold = 23000 x $10.66 = $245,228
FIFO
Ending Inventory | |||
Date | units | Per unit | Total |
20-Jan | 3000 | $11 | $33,000 |
30-Jan | 3000 | $12 | $36,000 |
Total | 6000 | $69,000 |
Cost of Goods sold | |||
Date | units | Per unit | Total |
1-Jan | 2000 | $10 | $20,000 |
3-Jan | 18000 | $10.4 | $187,200 |
20-Jan | 3000 | $11 | $33,000 |
Total | 23000 | $240,200 |
b) LIFO
Ending Inventory | |||
Date | units | Per unit | Total |
1-Jan | 2000 | $10 | $20,000 |
3-Jan | 4000 | $10.4 | $41,600 |
Total | 6000 | $61,600 |
Cost of Goods sold | |||
Date | units | Per unit | Total |
3-Jan | 14000 | $10.4 | $145,600 |
20-Jan | 6000 | $11.0 | $66,000 |
30-Jan | 3000 | $12 | $36,000 |
Total | 23000 | $247,600 |
Periodic system | Ending inventory | COGS |
Average cost method | $63,972 | $245,228 |
FIFO | $69,000 | $240,200 |
LIFO | $61,600 | $247,600 |
B) Perpetual System
Perpetual system | Ending inventory | COGS |
Average cost method | $67,686 | $241,514 |
FIFO | $69,000 | $240,200 |
LIFO | $66,400 | $242,800 |