Samuelson and Messenger (S&M) began 2013 with 220 units of its one product. Thes

Question

Samuelson and Messenger (S&M) began 2013 with 220 units of its one product. These units were purchased near the end of 2012 for $22 each. During the month of January, 110 units were purchased on January 8 for $25 each and another 220 units were purchased on January 19 for $27 each. Sales of 130 units and 120 units were made on January 10 and January 25, respectively. There were 300 units on hand at the end of the month. S&M uses a periodic inventory system.

Calculate ending inventory and cost of goods sold for January using (1) FIFO, and (2) average cost. (Round your intermediate calculations to 1 decimal place. Round your average cost values to the nearest dollar amount.)

Samuelson and Messenger (S&M) began 2013 with 220 units of its one product. These units were purchased near the end of 2012 for $22 each. During the month of January, 110 units were purchased on January 8 for $25 each and another 220 units were purchased on January 19 for $27 each. Sales of 130 units and 120 units were made on January 10 and January 25, respectively. There were 300 units on hand at the end of the month. S&M uses a periodic inventory system.

Explanation / Answer

FIFO Opening Purchase / (Sale) Closing Units Rate Cost Units Rate Cost Units Rate Cost 01-Jan    220     22    4,840         -        -              -      220     22    4,840 08-Jan    220     22    4,840     110     25     2,750    220     22    4,840    110     25    2,750 10-Jan    220     22    4,840 (130)     22 (2,860) 90     22    1,980    110     25    2,750    110     25    2,750 19-Jan 90     22    1,980     220     27     5,940 90     22    1,980    110     25    2,750    110     25    2,750    220     27    5,940 25-Jan 90     22    1,980     (90)     22 (1,980)        -       22           -      110     25    2,750     (30)     25       (750) 80     25    2,000    220     27    5,940    220     27    5,940 31-Jan    300    7,940 Average Cost Opening Purchase / (Sale) Closing Units Rate Cost Units Rate Cost Units Rate Cost 01-Jan 220.0 22.0 4840.0 - - - 220.0 22.0 4840.0 08-Jan 220.0 22.0 4840.0 110.0 25.0 2750.0 330.0 23.0 7590.0 10-Jan 330.0 23.0 7590.0 (130.0) 23.0 (2990.0) 200.0 23.0 4600.0 19-Jan 200.0 23.0 4600.0 220.0 27.0 5940.0 420.0 25.1 10540.0 25-Jan 420.0 25.1 10540.0 (120.0) 25.1 (3012.0) 300.0 25.1 7528.0 31-Jan 300.0 7528.0

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