Question

Question 4 (of 10) value: 1.00 points Penn Company uses a periodic inventory system. At the end of the annual accounting pe 31, 2015, the accounting records provided the following information for product 1: Units Unit Cost $6 Inventory, December 31, 2014 For the year 2015; Purchase, March 21 Purchase, August 1 Inventory, December 31, 2015 1,940 5,160 2,870 4,080 8. Required: Compute ending inventory and cost of goods sold under FIFO, LIFO, and average cost inven methods. (Round "Average cost per unit" to 2 decimal places and final answers to neare dollar amount.) LIFO FIFO Average Cost Ending inventory Cost of goods sold

Answer 1

Average Cost $32,227 $46,523 Particulars Ans FIFO LIFO Ending inventory Cost of Good Sold $35,510 $28,760 $49,990 $43,240 Periodic inventory System: In this system, the cost of sales and inventory are determined as the end of the accounting period. Note (i) First in, first out method (FIFO) : In this method it is assumed that inventory which is purchased first will be sold first and the inventory will consist of recent purchases. Ending inventory Date Oct '6 Oct'18 Cost of Goods Sold Date Unit Amount Unit Rate Rate Amount Opening inventory $6 $8 $11,640 $8 $9 $9,680 1,210 1,940 $31,600 $43,240 $25,830 $35,510 Oct'6 3,950 2,870 5,890 4,080 Note (ii) Last in, first out method (LIFO) : In this method it is assumed that inventory which is purchased last will be sold first and the inventory will consist of old purchases. Ending inventory Date Cost of Goods Sold Date Unit Rate Unit Rate Amount Amount $9 $25,830 $24,160 $49,990 $8 $6 $17,120 Oct'18 2,870 Oct'6 2,140 Opening inventory $8 $11,640 Oct'6 1,940 3,020 $28,760 5,890 4,080 Note (iii) In weighted average cost method per unit purchase is derived by adding cost opening inventory and purchase made during the year and then dividing it by the adding the units of opening inventory and units purchased during the year Particulars Date Unit Rate Amount Unit Amount Rate Cost of Good Sold Ending inventory Opening inventory Oct '6 $11,640 $6 $8 $9 $7.90 $46,523 $32,227 1,940 5,890 $41,280 $25,830 $78,750 $7.90 $7.90 5,160 4,080 Oct'18 2,870 9,970 Average Cost [$78750/9970]