[The following information applies to the questions displayed below.]Ferris Company began January with 4,000 units of its principal product. The cost of each unit is $7. Merchandise transactions for the month of January are as follows: PurchasesDate of PurchaseUnits Unit Cost*Total CostJan. 103,000 $8 $24,000 Jan. 184,000 9 36,000 Totals7,000 60,000 * Includes purchase price and cost of freight. SalesDate of SaleUnits Jan. 52,000 Jan. 121,000 Jan. 203,000 Total6,000 5,000 units were on hand at the end of the month. 2. Calculate January's ending inventory and cost of goods sold for the month using LIFO, periodic system. **LIFO Periodic Inventory Accounting Method**This table illustrates the calculation of Cost of Goods Sold (COGS) and Ending Inventory using the Last In, First Out (LIFO) periodic inventory method.**Cost of Goods Available for Sale:**- **Beginning Inventory:** - Number of Units: 4,000 - Cost per Unit: $7.00 - Total Cost: $28,000- **Purchases:** - **January 10:** - Number of Units: 3,000 - Cost per Unit: $8.00 - Total Cost: $24,000 - **January 18:** - Number of Units: 4,000 - Cost per Unit: $9.00 - Total Cost: $36,000- **Total:** - Number of Units: 11,000 - Total Cost: $88,000**Cost of Goods Sold (COGS) - Periodic LIFO:**- Number of Units Sold: 2,000- Cost per Unit: $7.00- Total COGS: $14,000**Ending Inventory - Periodic LIFO:**- Number of Units in Ending Inventory: 1,000- Cost per Unit: $7.00- Ending Inventory Value: $7,000**Summary:** This LIFO periodic table demonstrates how inventory costs are assigned to the cost of goods sold and ending inventory, with the most recent costs used to determine the COGS, leaving the oldest costs for ending inventory valuation.

The inventory of an organization can be valued using FIFO, LIFO, and weighted average cost. Under…

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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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[The following information applies to the questions displayed below.]

Ferris Company began January with 4,000 units of its principal product. The cost of each unit is $7. Merchandise transactions for the month of January are as follows:

	Purchases
Date of Purchase	Units	Unit Cost*	Total Cost
Jan. 10	3,000	$	8	$	24,000
Jan. 18	4,000		9		36,000
Totals	7,000				60,000

* Includes purchase price and cost of freight.

Sales
Date of Sale	Units
Jan. 5	2,000
Jan. 12	1,000
Jan. 20	3,000
Total	6,000

5,000 units were on hand at the end of the month.

2. Calculate January's ending inventory and cost of goods sold for the month using LIFO, periodic system.

**LIFO Periodic Inventory Accounting Method**

This table illustrates the calculation of Cost of Goods Sold (COGS) and Ending Inventory using the Last In, First Out (LIFO) periodic inventory method.

**Cost of Goods Available for Sale:**

- **Beginning Inventory:**
- Number of Units: 4,000
- Cost per Unit: $7.00
- Total Cost: $28,000

- **Purchases:**
- **January 10:**
- Number of Units: 3,000
- Cost per Unit: $8.00
- Total Cost: $24,000
- **January 18:**
- Number of Units: 4,000
- Cost per Unit: $9.00
- Total Cost: $36,000

- **Total:**
- Number of Units: 11,000
- Total Cost: $88,000

**Cost of Goods Sold (COGS) - Periodic LIFO:**

- Number of Units Sold: 2,000
- Cost per Unit: $7.00
- Total COGS: $14,000

**Ending Inventory - Periodic LIFO:**

- Number of Units in Ending Inventory: 1,000
- Cost per Unit: $7.00
- Ending Inventory Value: $7,000

**Summary:**

This LIFO periodic table demonstrates how inventory costs are assigned to the cost of goods sold and ending inventory, with the most recent costs used to determine the COGS, leaving the oldest costs for ending inventory valuation.

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