Question

Ferris Company began January with 7,000 units of its principal product. The cost of each unit is $8. Merchandise transactions for the month of January are as follows: Purchases Date of Purchase Units Unit Cost* Total Cost Jan. 10 4,000 $ 9 $ 36,000 Jan. 18 7,000 10 70,000 Totals 11,000 106,000 * Includes purchase price and cost of freight. Sales Date of Sale Units Jan. 5 3,000 Jan. 12 1,000 Jan. 20 4,000 Total 8,000 10,000 units were on hand at the end of the month.Calculate January's ending inventory and cost of goods sold for the month using each of the following alternatives:1. FIFO, periodic system.2. LIFO, periodic system.3. LIFO, perpetual system.4. Average cost, periodic system.5. Average cost, perpetual system.

Answer 1

Answer:

Instructions are listed below

Explanation:

Giving the following information:

Ferris Company began January with 7,000 units of its principal product. The cost of each unit is $8.

Merchandise transactions for January are as follows:

Jan. 10: 4,000 units at $ 9= $ 36,000

Jan. 18: 7,000 units at $10= 70,000

Totals: 11,000 units for 106,000

Sales:

Jan. 5: 3,000

Jan. 12: 1,000

Jan. 20: 4,000

Total: 8,000

10,000 units were on hand at the end of the month.

A) FIFO (first-in, first-out)

Inventory= 3,000*9 + 7,000*10= $97,000

COGS= 7,000*8 + 1,000*9= $65,000

B) LIFO periodic.

Inventory=7,000*8 + 3,000*9= $83,000

COGS= 7,000*10 + 1,000*9= 79,000

C) LIFO, perpetual.

COGS= 3,000*8 + 1,000*9 + 4,000*10= $73,000

Inventory= 4,000*8 + 3,000*9 + 3,000*10= $89,000

D) Average, periodic.

Purchase cost= (8+9+10)/3= 9

Inventory= 10000*9= $90,000

COGS= 8,000*9= $72,000

E) Average.

COGS= 3,000*8 + 1,000*8.5 + 4,000*9= $68,500

Inventory= 72,000