ABC Co. sells one product, which it purchases from various suppliers. ABC’s trial balance at December 31, year 2, included the following accounts: Sales (33,000 units @ P16) P528,000; Sales discounts 7,500; Purchases 368,900; Purchase discounts 18,000; Freight-in 5,000; Freight-out 11,000 ABC Co.’s inventory purchases during year 2 were as follows: Units Cost per unit Total cost Beginning inventory, January 1 8,000 P8.20 P 65,600 Purchases, quarter ended March 31 12,000 8.25 99,000 Purchases, quarter ended June 30 15,000 7.90 118,500 Purchases, quarter ended September 30 13,000 7.50 97,500 Purchases, quarter ended December 31 7,000 7.70 53,900 Additional information ABC’s accounting policy is to report inventory in its financial statements at the lower of cost or market, applied to total inventory. ABC has determined that, at December 31, year 2, the replacement cost of its inventory was P8 per unit and the net realizable value was P8.80 per unit. ABC’s normal profit margin is P1.05 per unit. From this information, compute the cost of goods sold under each of the following. (Provide a solution.) 1. First-in First-out 2. Weighted Average 3. Moving average
ABC Co. sells one product, which it purchases from various suppliers. ABC’s
ABC Co.’s inventory purchases during year 2 were as follows:
Units Cost per unit Total cost
Beginning inventory, January 1 8,000 P8.20 P 65,600
Purchases, quarter ended March 31 12,000 8.25 99,000
Purchases, quarter ended June 30 15,000 7.90 118,500
Purchases, quarter ended September 30 13,000 7.50 97,500
Purchases, quarter ended December 31 7,000 7.70 53,900
Additional information
ABC’s accounting policy is to report inventory in its financial statements at the lower of cost or market, applied to total inventory. ABC has determined that, at December 31, year 2, the replacement cost of its inventory was P8 per unit and the net realizable value was P8.80 per unit. ABC’s normal profit margin is P1.05 per unit. From this information, compute the cost of goods sold under each of the following. (Provide a solution.)
1. First-in First-out
2. Weighted Average
3. Moving average
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