Question

Required information [The following information applies to the questions displayed below.] Ferris Company began January with 8,000 units of its principal product. The cost of each unit is $6. Merchandise transactions for the month of January are as follows: Purchases Unit Cost* $ 7 8 Units 6,000 8,000 Total Cost $ 42,000 64,000 Date of Purchase Jan. 10 Jan. 18 14,000 106,000 Totals *Includes purchase price and cost of freight Sales Units 4,000 2,000 4,000 Date of Sale Jan. 5 Jan. 12 Jan. 20 10,000 Total 12,000 units were on hand at the end of the month. 2. Calculate January's ending inventory and cost of goods sold for the month using LIFO, periodic system.

Answer 1

Ferris Company LIFO Method: Date Activity Beginning 10-Jan Purchase 18-Jan Purchase No of units Unit cost 8000 $ 6.00 6000 $ 7.00 8000 $ 8.00 Total Cost $ 48,000.00 $ 42,000.00 $ 64,000.00 Cost of goods available for sale $ 154,000.00 Less : Ending Inventory: 12000 Units 8000 units @ $6 4000 units @ $7 $ 48,000.00 $ 28,000.00 $ 76,000.00 Cost of goods sold = Cost of goods available for sale - Ending inventory $ 78,000.00 Note : LIFO Method Assumes that Goods which are purchased last will be sold First , So in Ending inventory units will be there which are purchased First