Question

Marigold-Mart Centre Inc. began operations on May 1 and uses a perpetual inventory system. During May, the company had the following purchases and sales for one of its products:

Purchases Sales Date Units Unit Cost Units Unit Price May 1 120 $101 $252 8 100 110 301 326

Determine the cost of goods sold and cost of ending inventory using (1) FIFO and (2) average cost.

Answer 1

Summary Q.No. Method Cost of goods Sold cost of ending inventory $ 2,300 $ 2,224 1 2 FIFO Average Cost $ $ 27,720 27,796

1) Cost assigned to ending inventory Cost of Goods Sold = $ 8080+4040+4400+6600+4600 2,300 27,720 $ Perpectual FIFO Goods Purchased Cost of Goods Sold Inventry Balance # of Date Cost per Unit # of Units Sold | Cost per | Unit | Cost of Goods Sold # of Units Sold 120 Cost per Unit Inventory Balance Units 120 s101.00 $101.00S 12,120 May-01 May-03 80 S 101.00 S 8,080 40 May-08 100 $110.00 40 $101.00 $101.00 $110.00 S S S 4,040 4,040 11.000 100 May-13 S S 101.00 110.00 S S 4,040 4,400 May-1560 S115.00 60 60 60 60 20 $110.00 $110.00 $115.00 s115.00 $115.00 S S $ S S 6,600 6,600 6,900 6,900 2,300 60 May-20 May-27 S S 110.00 115.00 S S 6,600 | 4,600

2) Average Cost (Perpetual): Goods Purchased Cost of Goods Sold Date # of Units 120 Cost per Unit s101.00 # of Units Sold Cost per Unit Cost of Goods Sold Inventory Balance # of Cost per Inventory Units Unit Balance Sold 120 s101.00S 12,120 May-01 S 101.00 S 8,080 May-03 May-08 100 $110.00 40 40 100 140 60 $101.00 S s101.00 S $110.00 $ $107.43S $107.43S 4,040 4,040 11,000 15,040 6,446 May-13 S 107.43S 8,594 May-15 1 60 115.00 60 60 120 60 20 $107.43S $115.00 S s111.21 S S111.21 S s111.21 S 6,446 6.900 13,346 6,673 2,224 May-20 May-27 60 40 S S 111.21 S 111.21 S 6,673 4,449 Cost assigned to ending inventory Cost of Goods Sold = $ 8080+ $ 8594+$6673+$4449 $ $ 2,224 27,796