Question

the FIFO and weighted average methods QUESTION 2 1101 Build a Bear is a small toy shop which buys and sells Teddy Bears. The teddy bear price has fluctuated within the period of February 2017. You are given the following information for the month of February February 2017 1/02/17 Opening Balance - 200 units @ the total cost of R4 000 for all units 3/02/17 Sold 50 units. 5/02/17 Purchased 150 units @R22 per teddy bear. 6/02/17 Sold 100 units 8/02/17 Sold 80 teddy bears. 14/02/17 You conducted quality checks on all stock and identified 10 teddy bears with defects which came from the supplier. You returned the 10 teddy bears which were purchased on 05/02/17 15/02/17 Purchased 80 teddy bears @R23 per unit. 21/02/17 Sold 170 teddy bears. 27/0217 Purchased 70 units @ R24 per teddy bear 28/02/17 Closing inventory Balance and stock on hand for next month. Required: Calculate and record the values for the month of February using the FIFO (First-in-First-Out) method (10)

Answer 1

FIFO method - first in first out here oldest or earlier purchased and balance sold out first
FIFO	receipt			issue			Balance
A	B	C	D	E	F	H	H	I	J
	Units	Unit price	Amount (units * unit price)	Units	Unit price	Amount (units * unit price)	Units	Unit price	Amount (units * unit price)
Beginning Inventory, 1/2/17	200	20	4000				200	20	4000
03/02/2017				50	20	1000	150	20	3000
05/02/2017	150	22	3300				150	20	3000
							150	22	3300
06/02/2017				100	20	2000	50	20	1000
							150	22	3300
08/02/2017				50	20	1000	120	22	2640
				30	22	660
14/02/2017, Retuned due to defects				10	22	220	110	22	2420
15/02/2017	80	23	1840				110	22	2420
							80	23	1840
21/02/2017				110	22	2420	20	23	460
				60	23	1380
27/02/2017	70	24	1680				20	23	460
							70	24	1680
28/2/17 Ending Balance							20	23	460
							70	24	1680
TOTAL	430		10820	410		8680	90		2140
	Beginning unit price= total cost/ beginning units
	=4000/200 =20
	Ending units 28/2/17		90
	Ending balance		2140

Balance column suggest that oldest purchased less the sale and returned