Samuelson and Messenger (S&M) began 2013 with 250 units of its one product. Thes
ID: 2460670 • Letter: S
Question
Samuelson and Messenger (S&M) began 2013 with 250 units of its one product. These units were purchased near the end of 2012 for $20 each. During the month of January, 125 units were purchased on January 8 for $23 each and another 250 units were purchased on January 19 for $25 each. Sales of 200 units and 150 units were made on January 10 and January 25, respectively. There were 275 units on hand at the end of the month. S&M uses a periodic inventory system. Calculate ending inventory and cost of goods sold for January using (1) FIFO, and (2) average cost. (Round your intermediate calculations to 1 decimal place. Round your average cost per unit to 2 decimal places.)
Explanation / Answer
Beginning balance 250 * 20
$5,000
Jan 8 125*23
2,875
Jan 19 250*25
6,250
Total 625 units
$14,125
FIFO
Cost of goods available $14,125
Less: Ending inventory
(250*25 + 25*23) (6,825)
Cost of goods sold $7,300
Average cost
= $14,125 / 625 = $22.60
Cost of goods sold 350* 22.60 = $7,910
Ending inventory 275 *22.60 = $6,215
Beginning balance 250 * 20
$5,000
Jan 8 125*23
2,875
Jan 19 250*25
6,250
Total 625 units
$14,125
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