Pillsbury Company\'s record of transactions concerning the month of September we
ID: 2466590 • Letter: P
Question
Pillsbury Company's record of transactions concerning the month of September were as follows: Compute the inventory at September 30 on each of the following bases. Assume that the company used the periodic method to report its inventory. Carry unit costs to the nearest cent. First-in, first-out (FIFO). Last-in, first-out (LIFO). Average cost. Repeat your calculations in (1), (2), and (3) above, under the assumption that the company used the perpetual method to report its inventory. Carry average unit costs to at least two decimal places.Explanation / Answer
A)
Total number of units available for sale = 300+200+300+300+500+300=1900 units
Total number of units sold = 400+600+300+200 = 1500 units
Total number of units in ending inventory = 1900 - 1500 = 400 units
Under FIFO the units in the beginning inventory and the units purchased first will be sold first
Cost of inventory on Sept 30 = $12.30 * 100 + $12.40 * 300 = $4950
2)
Total number of units available for sale = 300+200+300+300+500+300=1900 units
Total number of units sold = 400+600+300+200 = 1500 units
Total number of units in ending inventory = 1900 - 1500 = 400 units
Under LIFO the units purchased last will be sold first
Cost of inventory on Sept 30 = 300*$12 + 100*$12.10 = $4810
3)
Total number of units available for sale = 300+200+300+300+500+300=1900 units
Total number of units sold = 400+600+300+200 = 1500 units
Total number of units in ending inventory = 1900 - 1500 = 400 units
Cost of goods available for sale = Cost of (purchase + beginning inventory)
= 300*$12 + 200*$12.10+300*$12.25+300*$12.30+500*$12.30+300*$12.40 + $23255
Average cost = Total cost of of units available for sale / number of units available for sale = $23255 / 1900 units = $12.24 / unit
Cost of ending inventory = 400 units x $12.24 / unit = $4896
B)
(1) FIFO
Inventory at sept 30 = $4950
(2) LIFO
Inventory on 30 Sept = $4890
(3) Average Cost
Inventory on sept 30 = $4930
Date Goods Purchased Cost of goods sold Inventory Balance No. Of units Cost perunit no. Of units cost per unit cost of goods sold no of units cost per unit ($) inventory balance Sep-01 300 @ 12.00 = 3600 Sep-03 200 @ 12.1 200 @ 12.10 = 2420 Total 500 6020 Sep-04 300 @ 12 = 3600 100 @ 12.1 = 1210 100 @ 12.10 = 1210 Total 400 4810 100 1210 Sep-12 300 @ 12.25 300 @ 12.25 = 3675 Sep-16 300 @ 12.3 300 @ 12.30 = 3690 Total 400 4810 700 8575 Sep-17 100 @ 12.1 = 1210 300 @ 12.25 = 3675 200 @ 12.3 = 2460 100 @ 12.30 = 1230 Total 1000 12155 100 1230 Sep-22 500 @ 12.3 500 @ 12.30 = 6150 Sep-26 300 @ 12.4 300 @ 12.40 = 3720 Total 1000 12155 900 11100 Sep-27 100 @ 12.3 = 1230 200 @ 12.3 = 2460 300 @ 12.30 = 3690 300 @ 12.40 = 3720 Total 1300 15845 600 7410 Sep-27 200 @ 12.3 = 2460 100 @ 12.30 = 1230 300 @ 12.40 = 3720 Total 1500 18305 400 4950