Ferris Company began 2018 with 8,000 units of its principal product. The cost of
ID: 2548519 • Letter: F
Question
Ferris Company began 2018 with 8,000 units of its principal product. The cost of each unit is $8. Merchandise transactions for the month of January 2018 are as follows Purchases Date of Purchase Jan. 10 Jan. 18 Units 6,000 8,000 14,000 Total Cost $ 54,000 80,000 134,000 Unit Cost* 10 Totals "Includes purchase price and cost of freight. Sales Date of Sale Jan. 5 Jan. 12 Jan. 20 Units 4,000 2,000 5,000 11,000 Total 11,000 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 systemExplanation / Answer
a) FIFO, periodic system Units available for sale= 8000+6000+8000= 22000 Units sold=11000 Ending inventory=11000 Cost of goods sold Units Unit cost Total Sale from beginning inventory 8000 8 64000 Sale from purchase Jan 10 3000 9 27000 11000 91000 Ending inventory Units Unit cost Total Inventory from purchase Jan 10 3000 9 27000 Inventory from purchase Jan 18 8000 10 80000 11000 107000 Ending inventory is $107000 Cost of goods sold= $91000 b) LIFO, periodic Units available for sale= 8000+6000+8000= 22000 Units sold=11000 Ending inventory=11000 Cost of goods sold Units Unit cost Total Sale from purchase Jan 18 8000 10 80000 Sale from purchase Jan 10 3000 9 27000 11000 107000 Ending inventory Units Unit cost Total Inventory from beginning inventory 8000 8 64000 Inventory from purchase Jan 10 3000 9 27000 11000 91000 Ending inventory is $91000 Cost of goods sold= $107000 c) LIFO, perpetual Purchases Sales Balance Particulars Units Unit Cost Total Units Unit Cost Total Units Unit Cost Total Beginning Invenory - - - - - - 8000 8 64000 Sale Jan 5 4000 8 32000 4000 8 32000 Purchase Jan 10 6000 9 54000 4000 8 32000 6000 9 54000 Sale Jan 12 2000 9 18000 4000 8 32000 4000 9 36000 Purchase Jan 18 8000 10 80000 4000 8 32000 4000 9 36000 8000 10 80000 Sale 5000 10 50000 4000 8 32000 4000 9 36000 3000 10 30000 Therefore cost of goods sold= 32000+18000+50000= $100000 Ending inventory= 32000+36000+30000= $98000 d) Average cost, periodic system: Unit cost= Total cost/ total number of units available for sale =(8000*8+6000*9+8000*10)/(8000+6000+8000)= 198000/22000= $9 Units available for sale= 8000+6000+8000= 22000 Units sold=11000 Ending inventory=11000 Cost of goods sold= 11000*9= $99000 Ending inventory= 11000*9= $99000 e) Average cost, perpetual system: Purchases Sales Balance Particulars Units Unit Cost Total Units Unit Cost Total Units Unit Cost Total Beginning Invenory - - - - - - 8000 8 64000 Sale Jan 5 4000 8 32000 4000 8 32000 Purchase Jan 10 6000 9 54000 4000 8 32000 6000 9 54000 10000 8.6 86000 Sale Jan 12 2000 8.6 17200 8000 8.6 68800 Purchase Jan 18 8000 10 80000 8000 8.6 68800 8000 10 80000 16000 9.3 148800 Sale 5000 9.3 46500 11000 9.3 102300 Cost of goods sold= 32000+17200+46500= $95700 Ending inventory= $102300
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