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Periodic and Perpetual Systems —Calculating Ending Inventory and Cost of Sales using Average Cost, Moving Average,...
Periodic and Perpetual Systems —Calculating Ending Inventory and Cost of Sales using Average Cost, Moving Average, FIFO, LIFO, and Dollar-Value LIFO
The inventory records of Mod Oil Company for January 2020 showed the following data for an item of its merchandise for sale (assume that the six transactions occurred in the order shown).
| Date | Units | Unit Cost | Total |
|---|---|---|---|
| Beginning inventory (Jan. 1) | 900 | $6.00 | $5,400 |
| Jan. 3 Purchases | 1,080 | 6.10 | 6,588 |
| Jan. 5 Sales (1,620 units) | |||
| Jan. 10 Purchases | 1,080 | 6.20 | 6,696 |
| Jan. 20 Sales (900 units) | |||
| Jan. 25 Purchases | 720 | 6.30 | 4,536 |
| Jan. 28 Sales (540 units) | |||
| Total available for sale | 3,780 | $23,220 |
Its ending inventory of 720 units can be specifically identified as follows: 180 units from the January 3 purchase, 90 units from the January 10 purchase, and 450 units from the January 25 purchase.
Compute ending inventory and cost of goods sold for the month ended January 31 using the methods indicated below.
- Round your final answer to the nearest whole dollar.
- Do not round per unit costs in your calculations.
| e. Moving average (perpetual) | Answer | Answer |
| f. FIFO (perpetual) | Answer | Answer |
| g. LIFO (perpetual) | Answer | Answer |
| h. Dollar-value LIFO* | Answer | Answer |
*Assume that the beginning inventory is the base layer at a cost of $6.00 per unit. The price index for
Solutions
Expert Solution
| Moving average Method | |||||||||
| Date | Purchases | Sales | Ending inventory | ||||||
| Units | Unit Price | Amount | Units | Unit Price | Amount | Units | Weighted Cost | Amount | |
| 1-Jan | 900 | 6.00 | 5,400.00 | ||||||
| 3-Jan | 1080 | 6.1 | 6588 | 1980 | 6.05 | 11,988.00 | |||
| 5-Jan | 1620 | 6.05 | 9,808.36 | 360 | 6.05 | 2,179.64 | |||
| 10-Jan | 1080 | 6.2 | 6696 | 1440 | 6.16 | 8,875.64 | |||
| 20-Jan | 900 | 6.16 | 5,547.27 | 540 | 6.16 | 3,328.36 | |||
| 25-Jan | 720 | 6.3 | 4536 | 1260 | 6.24 | 7,864.36 | |||
| 28-Jan | 540 | 6.24 | 3,370.44 | 720 | 6.24 | 4,493.92 |
| Ending inventory = 720 units at 6.24 = 4493.92 |
| Cost of goods sold = 9808.36 + 5547.27 + 3370.44 = 18726.08 |
| FIFO Method | |||||||||
| Date | Purchases | Sales | Ending inventory | ||||||
| Units | Unit Price | Amount | Units | Unit Price | Amount | Units | Cost | Amount | |
| 1-Jan | 900 | 6.00 | 5,400.00 | ||||||
| 3-Jan | 1080 | 6.1 | 6588 | 900 | 6.00 | 5,400.00 | |||
| 1080 | 6.10 | 6,588.00 | |||||||
| 5-Jan | 900 | 6.00 | 5,400.00 | 0 | - | - | |||
| 720 | 6.10 | 4,392.00 | 360 | 6.10 | 2,196.00 | ||||
| 10-Jan | 1080 | 6.2 | 6696 | 360 | 6.10 | 2,196.00 | |||
| 1080 | 6.20 | 6,696.00 | |||||||
| 20-Jan | 360 | 6.10 | 2,196.00 | 0 | 6.10 | - | |||
| 540 | 6.20 | 3,348.00 | 540 | 6.20 | 3,348.00 | ||||
| 25-Jan | 720 | 6.3 | 4536 | 540 | 6.20 | 3,348.00 | |||
| 720 | 6.30 | 4,536.00 | |||||||
| 28-Jan | 540 | 6.20 | 3,348.00 | 0 | 6.20 | - | |||
| 720 | 6.30 | 4,536.00 | |||||||
| Cost of goods sold | 18,684.00 |
| Ending inventory = 720 units at 6.30 = 4536 |
| Cost of goods sold = 5400+4392+2196+3348+3348 = 18684 |
| LIFO Method | |||||||||
| Date | Purchases | Sales | Ending inventory | ||||||
| Units | Unit Price | Amount | Units | Unit Price | Amount | Units | Cost | Amount | |
| 1-Jan | 900 | 6.00 | 5,400.00 | ||||||
| 3-Jan | 1080 | 6.1 | 6588 | 900 | 6.00 | 5,400.00 | |||
| 1080 | 6.10 | 6,588.00 | |||||||
| 5-Jan | 1080 | 6.10 | 6,588.00 | 360 | 6.00 | 2,160.00 | |||
| 540 | 6.00 | 3,240.00 | 0 | 6.10 | - | ||||
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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
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Date
Units
Unit Cost
January 1, 2020 (beginning inventory)
100
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January 15, 2020
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January 30, 2020
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Total Cost
Beginning inventory on hand
1-Jan
60,000
$2.00
$120,000
Purchases during month
5-Jan
103,600
$2.00
$207,200
20-Jan
293,900
$2.10
$617,190
Sales of inventory
25-Jan
383,900
Beginning
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73,600
Purchases during month
8-Feb
282,200
$2.20
$620,840
23-Feb
153,500
$2.60
$399,100
Sales of inventory
27-Feb
407,600
Ending Inventory
101,700
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Unit Cost
Total Cost
Beginning inventory on hand
1-Jan
60,000
$2.00
$120,000
Purchases during month
5-Jan
103,600
$2.00
$207,200
20-Jan
293,900
$2.10
$617,190
Sales of inventory
25-Jan
383,900
Beginning
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73,600
Purchases during month
8-Feb
282,200
$2.20
$620,840
23-Feb
153,500
$2.60
$399,100
Sales of inventory
27-Feb
407,600
Ending Inventory
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Jan
Feb
Cost of goods sold
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Unit Cost
Total Cost
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1-Jan
60,000
$2.00
$120,000
Purchases during month
5-Jan
103,600
$2.00
$207,200
20-Jan
293,900
$2.10
$617,190
Sales of inventory
25-Jan
383,900
Beginning inventory at
1-Feb
73,600
Purchases during month
8-Feb
282,200
$2.20
$620,840
23-Feb
153,500
$2.60
$399,100
Sales of inventory
27-Feb
407,600
Ending Inventory
101,700
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Jan
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Sale
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Sale
300
7.30
2,190
12
Purchase
400
4.50
1,800
15
Sale
200
7.40
1,480
18
Purchase
300
4.60
1,380
22
Sale
400
7.40
2,960
25
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...
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