Ferris Company began 2018 with 7,000 units of its principal product. The cost of

Question

Ferris Company began 2018 with 7,000 units of its principal product. The cost of each unit is $9. Merchandise transactions for the month of January 2018 are as follows: Purchases Date of Purchase Units Unit Cost* Total Cost Jan. 10 6,000 $ 10 $ 60,000 Jan. 18 7,000 11 77,000 Totals 13,000 137,000 *Includes purchase price and cost of freight. Sales Date of Sale Units Jan. 5 3,000 Jan. 12 1,000 Jan. 20 4,000 Total 8,000 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.

Explanation / Answer

Periodic FIFO DATE Cost of goods available for sale Cost of Goods sold Closing inventory Units Rate Amount Units Rate Amount Units Rate Amount Beginning Inventory 7000 9 63000 7000 9 63000 Purchase 10-Jan 6000 10 60000 1000 10 10000 5000 10 50000 18-Jan 7000 11 77000 7000 11 77000 TOTALS 20000 200,000 8000 73,000 12000 127,000 Periodic LIFO DATE Cost of goods available for sale Cost of Goods sold Closing inventory Units Rate Amount Units Rate Amount Units Rate Amount Beginning Inventory 7000 9 63000 7000 9 63000 Purchase 10-Jan 6000 10 60000 1000 1 10000 5000 10 50000 18-Jan 7000 11 77000 7000 11 77000 TOTALS 20000 200,000 8000 87,000 12000 113,000 Perpetual LIFO DATE Cost of goods available for sale Cost of Goods sold Closing inventory Units Rate Amount Units Rate Amount Units Rate Amount Beginning Inventory 7000 9 63000 7000 9 63000 5-Jan 3000 9 27000 4000 9 36000 10-Jan 6000 10 60000 4000 9 36000 6000 10 60000 12-Jan 1000 10 10000 4000 9 36000 5000 10 50000 18-Jan 7000 11 77000 4000 9 36000 5000 10 50000 7000 11 77000 20-Jan 4000 11 44000 4000 9 36000 5000 10 50000 3000 11 33000 TOTALS 20000 200,000 8000 81,000 12000 119,000 Weighted Average-Periodic DATE Cost of goods available for sale Cost of Goods sold Closing inventory Units Rate Amount Units Rate Amount Units Rate Amount Beginning Inventory 7000 9 63000 Purchase 8-Aug 6000 10 60000 18-Aug 7000 11 77000 TOTALS 20000 200000 8000 10 80,000 12000 10 120,000 Average Cost per unit = Total cost of goods available/ total units (200,000/20,000) = $ 10 per unit Perpetual-Average DATE Cost of goods available for sale Cost of Goods sold Closing inventory Units Rate Amount Units Rate Amount Units Rate Amount Beginning Inventory 7000 9 63000 7000 9 63000 5-Jan 3000 9 27000 4000 9 36000 10-Jan 6000 10 60000 4000 9 36000 6000 10 60000 Average cost 10000 9.6 96000 12-Jan 1000 9.6 9600 9000 9.6 86400 18-Jan 7000 11 77000 9000 9.6 86400 7000 11 77000 Average cost 16000 10.2125 163400 20-Jan 4000 10.2125 40850 12000 10.2125 122550 TOTALS 20000 200,000 8000 77,450 12000 10.2125 122,550

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