Question

Ferris Company began 2018 with 6,000 units of its principal product. The cost of each unit is $6. Merchandise transactions for the month of January 2018 are as follows:
Purchases
Date of Purchase Units Unit Cost* Total Cost
Jan. 10 5,000 $ 7 $ 35,000
Jan. 18 6,000 8 48,000
Totals 11,000 83,000
*Includes purchase price and cost of freight.
Sales
Date of Sale Units
Jan. 5 3,000
Jan. 12 2,000
Jan. 20 4,000
Total 9,000
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.
Calculate January's ending inventory and cost of goods sold for the month using FIFO, periodic system.

Answer 1

Answer:

date of purchase    units        cost per unit         total cost

beginning inv.         6,000        $6                       $36,000

January 10               5,000        $7                       $35,000

January 18               6,000        $8                       $48,000

total                         17,000       $7                       $119,000

date of sale             units        

January 5                3,000        

January 12               2,000        

January 24              4,000        

ending inventory = 8,000 units

1. FIFO, periodic system.

ending inventory = (6,000 x $8) + (2,000 x $7) = $62,000

2. LIFO, periodic system.

ending inventory = (6,000 x $6) + (2,000 x $7) = $50,000

3. LIFO, perpetual system.

COGS = (3,000 x $6) + ((2,000 x $7) + (4,000 x $8) = $64,000

ending inventory = $119,000 - $64,000 = $55,000

4. Average cost, periodic system.

ending inventory = 8,000 x $7 = $56,000

5. Average cost, perpetual system.

COGS = (3,000 x $6) + ((2,000 x $6.625) + (4,000 x $7.3125) = $60,500

ending inventory = $119,000 - $60,500 = $58,500