Ferris Company began 2018 with 8,000 units of its principal product. The cost of

Question

Ferris Company began 2018 with 8,000 units of its principal product. The cost of each unit is $6. Merchandise transactions for the month of January 2018 are as follows:

*Includes purchase price and cost of freight.

12,000 units were on hand at the end of the month.

Required:
Calculate January's ending inventory and cost of goods sold for the month using each of the following alternatives:
1. FIFO, periodic system.
2. LIFO, periodic system.
3. LIFO, perpetual system.
4. Average cost, periodic system.
5. Average cost, perpetual system.

Purchases Date of Purchase Units Unit Cost* Total Cost Jan. 10 6,000 $ 7 $ 42,000 Jan. 18 8,000 8 64,000 Totals 14,000 106,000

Explanation / Answer

1. FIFO Periodic System (a) Cost of Inventory Latest Cost : 18 Jan (8000 Units*8) 64000 Next Latest Cost: 10 Jun (4000 Units*7) 28000 92000 (a) Cost of good sold Cost of opening Inventory (8000 Units*6) 48000 Add: Purphased during the year (6000 Units*7) 42000 (8000 Units*8) 64000 Total Cost 154000 Less: Cost of Inventory at the end 92000 62000 2. LIFO Periodic System (a) Cost of Inventory Earliest Cost : 01 Jan (8000 Units*6) 48000 Next Earliest Cost : 10Jan (4000 Units*7) 28000 76000 (a) Cost of good sold Cost of opening Inventory (8000 Units*6) 48000 Add: Purphased during the year (6000 Units*7) 42000 (8000 Units*8) 64000 Total Cost 154000 Less: Cost of Inventory at the end 76000 78000 3. LIFO Perpetual System Date Purchases Sales Balance Jan, 01 Opening 8000 units x 6 = 48000 Jan, 05 4000 units x 6 = 24000 4000 units x 6 = 24000 Jan, 10 6000 units x 7 = 42000 4000 units x 6 = 24000 6000 units x 7 = 42000 Jan, 12 2000 units x 7 = 14000 4000 units x 6 = 24000 4000 units x 7 = 28000 Jan, 18 8000 units x 8 = 64000 4000 units x 6 = 24000 4000 units x 7 = 28000 8000 units x 8 = 64000 Jan, 20 4000 units x 8 = 32000 4000 units x 6 = 24000 4000 units x 7 = 28000 4000 units x 8 = 32000 70000 84000 COGS = 70000 Inventory = 84000 4.Average Cost, Periodic Unit Unit cost Total Opening 8000 6 48000 6000 7 42000 8000 8 64000 22000 *7.00 154000 *154000/22000 COGS 12000 7 84000

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