Zeller Company sells gadgets and uses the perpetual inventory system. During the month of January 2020, the number of gadgets purchased and sold was as follows: Purchased Date Units Cost 01-Jan 100 2.00 03-Jan 150 4.00 08-Jan 200 4.50 15-Jan 250 5.00 27-Jan 100 6.00 Sold 10-Jan 250* 20-Jan 350** Assume the January 10 units were sold on account for $10 each, and the January 20 units were sold on account for $11 each. *for specific identification, sold 100 units of Jan 1 and 150 units of Jan 8 (Jan 10 sale) **for specific identification, sold 100 units of Jan 3 and 250 from Jan 15 (Jan 20 sale) Required: Complete the inventory record card, and calculate cost of goods sold and the cost of ending inventory under each of the following inventory cost flow assumptions: 1. a. FIFO b. Specific identification Weighted average С. 2. Prepare the journal entries required to record purchases and sales using the Weighted Average inventory cost flow assumption. Calculate the sum of cost of goods sold and ending inventory balances under each of the three assumptions. Explain the results. 3.

Zeller Company sells gadgets and uses the perpetual inventory system. During the month of January 2020, the number of gadgets purchased and sold was as follows: Purchased Date Units Cost 01-Jan 100 2.00 03-Jan 150 4.00 08-Jan 200 4.50 15-Jan 250 5.00 27-Jan 100 6.00 Sold 10-Jan 250* 20-Jan 350** Assume the January 10 units were sold on account for $10 each, and the January 20 units were sold on account for $11 each. *for specific identification, sold 100 units of Jan 1 and 150 units of Jan 8 (Jan 10 sale) **for specific identification, sold 100 units of Jan 3 and 250 from Jan 15 (Jan 20 sale) Required: Complete the inventory record card, and calculate cost of goods sold and the cost of ending inventory under each of the following inventory cost flow assumptions: 1. a. FIFO b. Specific identification Weighted average С. 2. Prepare the journal entries required to record purchases and sales using the Weighted Average inventory cost flow assumption. Calculate the sum of cost of goods sold and ending inventory balances under each of the three assumptions. Explain the results. 3.

Name: Zeller Company sells gadgets and uses the perpetual inventory system.
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Description: Zeller Company sells gadgets and uses the perpetual inventory system. During the month of January 2020, thenumber of gadgets purchased and sold was as follows:PurchasedDateUnitsCost01-Jan1002.0003-Jan 1504.0008-Jan2004.5015-Jan 2505.0027-Jan 1006.00

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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Concept explainers

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.

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Question

Zeller Company sells gadgets and uses the perpetual inventory system. During the month of January 2020, the
number of gadgets purchased and sold was as follows:
Purchased
Date
Units
Cost
01-Jan
100
2.00
03-Jan 150
4.00
08-Jan
200
4.50
15-Jan 250
5.00
27-Jan 100
6.00
Sold
10-Jan 250*
20-Jan 350**
Assume the January 10 units were sold on account for $10 each, and the January 20 units were sold on account for
$11 each.
*for specific identification, sold 100 units of Jan 1 and 150 units of Jan 8 (Jan 10 sale)
**for specific identification, sold 100 units of Jan 3 and 250 from Jan 15 (Jan 20 sale)
Required:
Complete the inventory record card, and calculate cost of goods sold and the cost of ending inventory
under each of the following inventory cost flow assumptions:
1.
а.
FIFO
b. Specific identification
Weighted average
с.
Prepare the journal entries required to record purchases and sales using the Weighted Average inventory
cost flow assumption.
2.
Calculate the sum of cost of goods sold and ending inventory balances under each of the three
assumptions. Explain the results.
3.

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Requirement #1, Inventory Valuation under FIFO, Specific Identification and Weighted Average.

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Requirement #2, Journal Entries

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Requirement #3, Evaluation

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