Calculate the Ending Inventory, Cost of Goods Sold, Cost of Goods Available for Sale and Gross Profit under the Periodic FIFO, Periodic LIFO, Periodic Average, Perpetual FIFO, Perpetual LIFO methods. Information Given in the Problem Purchases Sales # UnitsCost Per UnitTotal Cost # UnitsSelling Price Per UnitTotal Sales1-JanBeginning Inventory300 $ 10.00 $ 3,000 4-JanSale 240 $ 16.00 $ 3,84011-JanPurchase450 $ 12.00 $ 5,400 13-JanSale 360 $ 17.50 $ 6,30020-JanPurchase480 $ 14.00 $ 6,720 27-JanSale 300 $ 18.00 $ 5,400Available for Sale (Units, CGAS) 1,230 $ 15,120 Sales (Units, Dollar Amount of Sales) 900 $ 15,540

Answered: Calculate the Ending Inventory, Cost of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Calculate the Ending Inventory, Cost of Goods Sold, Cost of Goods Available for Sale and Gross Profit under the Periodic FIFO, Periodic LIFO, Periodic Average, Perpetual FIFO, Perpetual LIFO methods.

Information Given in the Problem
		Purchases		Sales
		# Units	Cost Per Unit	Total Cost		# Units	Selling Price Per Unit	Total Sales
1-Jan	Beginning Inventory	300	$ 10.00	$ 3,000
4-Jan	Sale					240	$ 16.00	$ 3,840
11-Jan	Purchase	450	$ 12.00	$ 5,400
13-Jan	Sale					360	$ 17.50	$ 6,300
20-Jan	Purchase	480	$ 14.00	$ 6,720
27-Jan	Sale					300	$ 18.00	$ 5,400
Available for Sale (Units, CGAS)	1,230		$ 15,120

Sales (Units, Dollar Amount of Sales)					900		$ 15,540

Expert Solution

Explanation -

Inventory Valuation -

Inventory can be valued using three methods -

a. FIFO - Under this method company uses inventory that was purchased first for production.

b. LIFO - Under this method company uses inventory that was purchased last for production.

c. Average Cost - Under this method company uses the average cost of all the inventories purchased for production.

1. Periodic and Perpetual -

Under the Periodic inventory system company does not count the inventory after every sale transaction. They value it after the end of the period.

Whereas under a perpetual inventory system company counts the inventory after every sale transaction.

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