**Samuelson and Messenger (SAM) Inventory Accounting Example**In this example, we explore how Samuelson and Messenger (SAM) manage their inventory accounting using both FIFO and average cost methods.### Context- SAM began 2021 with 300 units of a single product, each purchased at $22.- During January, additional purchases included: - 200 units on January 8 at $25 each. - 260 units on January 19 at $27 each. Sales included:- 190 units on January 10.- 200 units on January 25.A periodic inventory system is utilized. By the end of January, 370 units remained in stock.### Requirements1. Calculate ending inventory and cost of goods sold (COGS) for January using FIFO.2. Calculate ending inventory and COGS for January using the average cost method.### Average Cost Method Calculation#### Cost of Goods Available for Sale- **Beginning Inventory**: 300 units at $22, totaling $6,600.- **Purchases**: - January 8: 200 units at $25, totaling $5,000. - January 19: 260 units at $27, totaling $7,020. **Total**: 760 units with a total cost of $18,620.#### Cost of Goods Sold and Ending Inventory (using average cost)- Compute the average cost per unit.- Calculate the COGS and ending inventory based on this average cost.(Note: The table is currently incomplete, requiring input for detailed calculations.)This exercise requires entering your calculations and results in the designated areas to determine the ending inventory and COGS accurately. Samuelson and Messenger (SAM) began 2021 with an inventory of 300 units of a product, each purchased for $22. During January, SAM purchased an additional 200 units on January 8 at $25 per unit and 260 units on January 19 at $27 per unit. Sales included 190 units on January 10 and 200 units on January 25, leaving 370 units at the end of the month. SAM uses a periodic inventory system.**Required Calculations:**1. Ending inventory and cost of goods sold (COGS) for January using FIFO (First-In, First-Out).2. Ending inventory and COGS for January using the average cost method.**Detailed FIFO Calculation:**The table is divided into three main sections: Cost of Goods Available for Sale, Cost of Goods Sold - Periodic FIFO, and Ending Inventory - Periodic FIFO.- **Cost of Goods Available for Sale:** - **Beginning Inventory:** 300 units at $22 each, totaling $6,600. - **Purchases on January 8:** 200 units at $25 each, totaling $5,000. - **Purchases on January 19:** 260 units at $27 each, totaling $7,020. - **Total Available:** 760 units, totaling $18,620.- **Cost of Goods Sold - Periodic FIFO:** - Sold 390 units in total (190 on Jan 10 and 200 on Jan 25). - Cost structure is not detailed in terms of unit allocation, remains zero in chart for simplicity.- **Ending Inventory - Periodic FIFO:** - 370 units at month-end. - 110 units from the January 8 purchase remain at $25 each, totaling $2,750. - 260 units from the January 19 purchase remain at $27 each, totaling $7,020. - Total Ending Inventory valued at $9,770.This demonstrates how the FIFO method allocates older costs to COGS and newer costs to ending inventory.

FIFO : In First-in first out method, the inventory bought first are sold first. Average cost: In…

Samuelson and Messenger (SAM) began 2021 with 300 units of its one product. These units were purchased near the end of 2020 for $22 each. During the month of January, 200 units were purchased on January 8 for $25 each and another 260 units were purchased on January 19 for $27 each. Sales of 190 units and 200 units were made on January 10 and January 25, respectively. There were 370 units on hand at the end of the month. SAM uses a periodic inventory system. Required: 1. Calculate ending inventory and cost of goods sold for January using FIFO. 2. Calculate ending inventory and cost of goods sold for January using average cost. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Calculate ending inventory and cost of goods sold for January using average cost. (Round cost per unit to 2 decimal places.) Cost of Goods Available for Sale Cost of Goods Sold - Average Cost Unit Cost $22.00 Average Cost per Unit Average Cost Beginning Inventory Purchases: January 8 January 19 Total # of units 300 200 $25.00 260 $27.00 760 Cost of Goods Available for Sale S $ 6,600 5,000 7,020 18,620 # of units sold < Required 1 Cost of Goods Sold $ 0 Required 2 > Ending Inventory - Average Cost # of units Average in ending Cost per inventory unit Ending Inventory $ 0

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q