The Mann Corporation began operations in 2011. Information relating to the compa

Question

The Mann Corporation began operations in 2011. Information relating to the company’s purchases of inventory and sales of products for 2011 and 2012 is presented below. Calculate the Cost of Goods Sold and Ending Inventory under FIFO Perpetual for both years. Be sure to include 2011 ending inventory into 2012 calculation Remember that the selling cost has no impact on your calculations 2011 Units Cost Total Cost of Inventory 1-Jan Purchase 200 $10 $2,000 1-Apr Sold 120 $25 1-Jul Purchase 100 $14 $1,400 1-Sep Sold 130 $25 2012 1-Jan Beginning Inventory 1-Jan Purchase 100 $16 $1,600 1-Apr Sold 80 $30 1-Jul Purchase 100 $18 $1,800 1-Sep Sold 100 $35 2011 2012 Cost of goods sold Cost of goods sold Ending inventory Ending inventory The Mann Corporation began operations in 2011. Information relating to the company’s purchases of inventory and sales of products for 2011 and 2012 is presented below. Calculate the Cost of Goods Sold and Ending Inventory under FIFO Perpetual for both years. Be sure to include 2011 ending inventory into 2012 calculation Remember that the selling cost has no impact on your calculations 2011 Units Cost Total Cost of Inventory 1-Jan Purchase 200 $10 $2,000 1-Apr Sold 120 $25 1-Jul Purchase 100 $14 $1,400 1-Sep Sold 130 $25 2012 1-Jan Beginning Inventory 1-Jan Purchase 100 $16 $1,600 1-Apr Sold 80 $30 1-Jul Purchase 100 $18 $1,800 1-Sep Sold 100 $35 2011 2012 Cost of goods sold Cost of goods sold Ending inventory Ending inventory

Explanation / Answer

Cost of goods sold and cost of ending inventory are same in perpeatual and periodic inventory system under FIFO

2011

Cost of the goods available for sale = $2000 + $1400 = $3400

Ending inventory = (200+100-120-130) = 50 units

Cost of ending inventory = cost of 50 units purchased in July 1, 2011 = 50 units x ($1400/100 units) = $700

Cost of goods sold

= Cost of goods available for sale - cost of ending inventory

= $3400 - $700 = $2700

2012

Cosat of the goods available for sale

= cost of beginning inventory + cost of purchase

= $700 + $1600 + $1800= $4100

ending inventory = (50+100+100) - (80+100) = 70 units

Cost of ending inventory = cost of 70 units purchased on July 1 2012 = 70 units x ($1800/100) = $1260

Cost of goods sold

= Cost of goods available for sale - cost of ending inventory

= $4100 - $1260

= $2840

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