Some of the information found on a detail inventory card for Sage Inc. for the f

Question

Some of the information found on a detail inventory card for Sage Inc. for the first month of operations is as follows.

Received

Date

No. of Units

Unit Cost

Issued,
No. of Units

Balance,
No. of Units

1.

Calculate average-cost per unit.

2. From these data compute the ending inventory on each of the following bases. Assume that perpetual inventory records are kept in units only. (1) First-in, first-out (FIFO). (2) Last-in, first-out (LIFO). (3) Average-cost.

3. If the perpetual inventory record is kept in dollars, and costs are computed at the time of each withdrawal, would the amounts shown as ending inventory in (1), (2), and (3) above be the same? What amount would be shown as ending inventory?

Received

Date

No. of Units

Unit Cost

Issued,
No. of Units

Balance,
No. of Units

January 2 1,600 $4.65 1,600 7 1,100 500 10 1,000 4.96 1,500 13 900 600 18 1,400 5.12 700 1,300 20 1,100 200 23 1,700 5.27 1,900 26 1,200 700 28 2,000 5.43 2,700 31 1,700 1,000

Explanation / Answer

Calculation of Ending Inventory: Average Cost Date Purchases Sales Balance Units PU Total Cost Units PU Total Cost Units PU Total Cost 02-Jan 1600 4.65 7440 Average Cost 07-Jan 1100 4.65 5115 500 4.65 2325 Opening Stock 7440 Add: Purchases 31947 10-Jan 1000 4.96 4960 1500 4.86 7285 Less: Sales 34,005 Closing Stock 5,382 13-Jan 900 4.86 4371 600 4.86 2914 Units 1000 Av Cost 5.38 18-Jan 1400 5.12 7168 700 5.04 3,529 1300 5.04 6,553 20-Jan 1100 5.04 5,545 200 5.04 1,008 23-Jan 1700 5.27 8959 1900 5.25 9,967 26-Jan 1200 5.25 6,295 700 5.25 3,672 28-Jan 2000 5.43 10860 2700 5.38 14,532 31-Jan 1700 5.38 9,150 1000 5.38 5,382 Total 7700 39387 6700 34,005 1000 5,382 Calculation of Ending Inventory: FIFO Date Purchases Sales Balance Units PU Total Cost Units PU Total Cost Units PU Total Cost 02-Jan 1600 4.65 7440 07-Jan 1100 4.65 5115 500 4.65 2325 10-Jan 1000 4.96 4960 500 4.65 2325 1000 4.96 4960 13-Jan 900 4.65 4185 600 4.96 2976 18-Jan 1400 5.12 7168 600 4.96 2,976 1300 5.12 6,656 100 5.12 512 20-Jan 1100 5.12 5,632 200 5.12 1,024 23-Jan 1700 5.27 8959 200 5.12 1024 1700 5.27 8959 26-Jan 200 5.12 1,024 700 5.27 3,689 1000 5.27 5,270 28-Jan 2000 5.43 10860 700 5.27 3689 2000 5.43 10860 31-Jan 700 5.27 3,689 1000 5.43 5,430 1000 5.43 5,430 Total 7700 39387 6700 33,833 1000 5,554 Calculation of Ending Inventory: LIFO Date Purchases Sales Balance Units PU Total Cost Units PU Total Cost Units PU Total Cost 02-Jan 1600 4.65 7440 07-Jan 1100 4.65 5115 500 4.65 2325 10-Jan 1000 4.96 4960 500 4.65 2325 1000 4.96 4960 13-Jan 900 4.96 4464 500 4.65 2325 100 4.96 496 18-Jan 1400 5.12 7168 700 5.12 3,584 500 4.65 2325 100 4.96 496 700 5.12 3584 20-Jan 700 5.12 3,584 200 4.65 930 100 4.96 496 300 4.65 1,395 23-Jan 1700 5.27 8959 200 4.65 930 1700 5.27 8959 26-Jan 1200 5.27 6,324 200 4.65 930 500 5.27 2635 28-Jan 2000 5.43 10860 200 4.65 930 500 5.27 2635 2000 5.43 10860 31-Jan 1700 5.43 9,231 200 4.65 930 500 5.27 2635 300 5.43 1629 Total 7700 39387 6700 34,193 1000 5,194 The Ending inventory will be same because Perpetual Inventory system is used above

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