USE THE PERPETUAL METHOD FOR INVENTORY. Date event Number of units Unit cost Tot
ID: 2379103 • Letter: U
Question
USE THE PERPETUAL METHOD FOR INVENTORY.
Date
event
Number of units
Unit cost
Total cost
Dec. 1
Beg. Inventory
500
$10
$5,000
Dec. 8
purchase
600
11
6,600
Dec. 13
purchase
300
12
3,600
Dec. 15
Sale
750
Dec. 24
purchase
300
13
3,900
Dec. 28
purchase
400
15
6,000
Dec. 30
sale
650
How do you calculate Cost of goods sold and ending inventory using the weighted average, FIFO, and LIFO inventory costing methods?
Weighted Ave. Cost
FIFO
LIFO
Ending inventory
Cost of Goods Sold
Date
event
Number of units
Unit cost
Total cost
Dec. 1
Beg. Inventory
500
$10
$5,000
Dec. 8
purchase
600
11
6,600
Dec. 13
purchase
300
12
3,600
Dec. 15
Sale
750
Dec. 24
purchase
300
13
3,900
Dec. 28
purchase
400
15
6,000
Dec. 30
sale
650
Explanation / Answer
Using the information above, we can calculate various performance and leverage ratios. Let's assume the following:
Each inventory valuation method causes the various ratios to produce significantly different results (excluding the effects of income taxes):
Inventory Cost = 1,000 units X $8 each = $8,000 Remember that the last units in are sold first; therefore, we leave the oldest units for ending inventory.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.