Question

Ferris Company began 2018 with 6,000 units of its principal product. The cost of each unit is $8. Merchandise transactions for the month of January 2018 are as follows:
Purchases
Date of PurchaseUnitsUnit Cost*Total Cost
Jan. 105,000$ 9$ 45,000
Jan. 186,0001060,000
Totals11,000105,000
* Includes purchase price and cost of freight.
Sales
Date of Sale Units
Jan. 53,000
Jan. 122,000
Jan. 204,000
Total9,000
8,000 units were on hand at the end of the month.

Required:
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 2018 with 6,000 units of its principal product. The cost of each unit is $8.

Purchases

Jan. 10: 5,000 units at $9= $45,000

Jan. 18: 6,000 units at $10= $60,000

Totals= 11,000 units for $105,000

Sales:

Jan. 5: 3,000 units

Jan. 12: 2,000 units

Jan. 20: 4,000 units

Total= 9,000 units

8,000 units were on hand at the end of the month.

1) FIFO (first-in, first-out) Periodic system

COGS= 6000*8 + 3000*9= $75,000

Inventory= 2000*9 + 6000*10= $78,000

2) LIFO (last-in, first-out) Periodic system.

COGS= 6000*10 + 3000*9= $87,000

Inventory= 6000*8 + 2000*9= $66,000

3) LIFO, Perpetual system.

COGS= 3,000*8 + 2,000*9 + 4,000*10= $82,000

Inventory= 3,000*8 + 3,000*9 + 2,000*10= $71,000

4) Weighted average; Periodic system.

Price= (8+9+10)/3= 9

COGS= 9,000*9= $81,000

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

5) Weighted average, perpetual system

COGS= 3,000*8 + 2,000*8.5 + 4,000*9= $77,000

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

Answer 2

Answer:

The cost of goods sold and endings inventory are both given below in explanation according to the information given.

Explanation:

Ferris Company began at 2018 with 6,000 units of its principal product. The cost of each unit is $8.

Beginning inventory = 6000*8 = $48000

Purchases :

Jan. 10:  5,000 units at $9 = $45,000

Jan. 18: 6,000 units at $10 = $60,000

Totals =  11,000 units for $105,000

Cost of goods available for sale = 17000 units for $153000

Sales:

Jan. 5:      3,000 units  

Jan: 12:   2,000 units

Jan: 20:   4,000 units

Total =     9,000 units

8,000 units were on hand at the end of the month.

1) FIFO (first-in, first-out) Periodic system

Cost of goods sold = 6000*8 + 3000*9= $75,000

Ending Inventory = 2000*9 + 6000*10= $78,000

2) LIFO (last-in, first-out) Periodic system.

Cost of goods sold = 6000*10 + 3000*9= $87,000

Ending Inventory = 6000*8 + 2000*9= $66,000

3) LIFO, Perpetual system.

Cost of goods sold = 3,000*8 + 2,000*9 + 4,000*10= $82,000  

Ending Inventory = 3,000*8 + 3,000*9 + 2,000*10= $71,000

4) Average cost, Periodic system.

Weighted average unit cost = $153000/17000 (units) = $9

Cost of goods sold = 9,000*$9 = $81,000

Ending Inventory = 8,000*9 = $72,000

Alternately, the cost of goods sold can also be calculated by multiplying total units by average price thus = 8000*$9 = $72000

5) Average cost, perpetual system .

Cost of goods sold = 3,000*8 + 2,000*8.5 + 4,000*9 = $77,000  

Ending Inventory = 8,000*9 = $72,000