Inventory Costing Methods-Periodic Method Chen Sales Corporation uses the periodic inventory system. On January 1, 2012, Chen had: 1,000 units of product A with a unit cost of $70 per unit. A summary of purchases and sales during 2012 follows: Unit Units Units Cost Purchased Sold Feb.2 400 Apr.6 $72 1,800 July 10 1,600 Aug.9 76 800 Oct.23 800 Dec.30 79 1,200 2:17 PM
Inventory Costing Methods-Periodic Method Chen Sales Corporation uses the periodic inventory system. On January 1, 2012, Chen had: 1,000 units of product A with a unit cost of $70 per unit. A summary of purchases and sales during 2012 follows: Unit Units Units Cost Purchased Sold Feb.2 400 Apr.6 $72 1,800 July 10 1,600 Aug.9 76 800 Oct.23 800 Dec.30 79 1,200 2:17 PM
Chapter1: Financial Statements And Business Decisions
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
Transcribed Image Text:Inventory Costing Methods-Periodic Method Chen Sales Corporation uses the periodic inventory system. On January 1, 2012,
Chen had: 1,000 units of product A with a unit cost of $70 per unit. A summary of purchases and sales during 2012 follows:
Unit
Units
Units
Cost Purchased Sold
Feb.2
400
Apr.6
$72
1,800
July 10
1,600
Aug.9
76
800
Oct.23
800
Dec.30
79
1,200
2:17 PM
口
O St T
2/5/2021

Transcribed Image Text:Required
a. Assume that Chen uses the first-in, first-out method. Compute the cost of goods sold for 2012 and the ending inventory
balance at December 31, 2012, for product A.
b. Assume that Chen uses the last-in, first-out method. Compute the cost of goods sold for 2012 and the ending inventory
balance at December 31, 2012, for product A.
C. Assume that Chen uses the weighted-average cost method. Compute the cost of goods sold for 2012 and the ending inventory
balance at December 31, 2012, for product A.
Do not round until your final answers. Round your answers to the nearest dollar.
a.
First-in, First-out:
Ending Inventory
24
Cost of Goods Sold $
b. Last-in, first-out:
Ending Inventory
$4
Cost of Goods Sold $
c. Weighted Average
Ending Inventory
2:16 PM
Cost of goods sold $
2/5/2021
Expert Solution
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Step 1
a)
Meaning of FIFO Method :-
FIFO stands for “First-In, First-Out”. The FIFO method assumes that the oldest products in a company’s inventory have been sold first. The costs paid for those oldest products are the ones used in the calculation.
Statement for Calculation of Cost of Goods Sold
Particulars Units Rate Amount
Sold Feb 2 | 400 | 70 | 28000 |
Sold July 10 | 600 | 70 | 42000 |
Sold July 10 | 1000 | 72 | 72000 |
Sold Oct 23 | 800 | 72 | 57600 |
Total | $199,600 |
Statement for Calculation of Ending Inventory Balance
Particulars | Units | Rate | Total |
Opening Inventory | 1000 | 70 | 70000 |
Sold Feb 2 | 400 | 70 | 28000 |
Balance | 600 | 70 | 42000 |
Purchase Apr 6 | 1800 | 72 | 129600 |
Balance | 2400 | 171600 | |
Sold July 10 | 600 | 70 | 42000 |
Sold July 10 | 1000 | 72 | 72000 |
Balance | 800 | 57600 | |
Purchase `Aug 9 | 800 | 76 | 60800 |
Balance | 1600 | 118400 | |
Sold Oct 23 | 800 | 72 | 57600 |
Balance | 800 | 60800 | |
Purchase Dec 30 | 1200 | 79 | 94800 |
Balance | 2000 | $155,600 |
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