Prepare a raw material inventory card for Material A using FIFO and Weighted Ave
ID: 2522379 • Letter: P
Question
Prepare a raw material inventory card for Material A using FIFO and Weighted Average methods of inventory costing for the following transactions:
June 1 Opening Balance 50 units @ $5.00
June 2 Purchases 40 units @ $4.50
June 3 Issues 70 units
June 4 Purchases 35 units @ $4.00
June 5 Issues 45 units
Prepare the journal entry necessary to charge the raw material issued to the production process.
Explanation / Answer
FIFO
Closing stock = 50 +40 -70 +35 -45
= 10 units
June 3, 70 units issued from 50 units opening and 20 from june 2 purchases
Value = 50*5 +20*4.5
=$340
June 5, 45 units issued from 20 units from june 2 and 25 units from june 4 purchases
= 20*4.5 + 25*4
= $190
Weighted Average Method
For June 3, = 50*5 + 40*4.5 / 90 Units
= 430/ 90
= $4.77 per unit
Value of stock issued on june 3 = $4.77* 70
= $334
Issued on 5th june = 430+140 / 125
=$ 4.56
= 45*4.56
= $205.2
Journal entry -
June 3
WIP inventory A/c Dr. $344
To Raw material a/c $344
(Stock issued to production)
June 5
WIP inventory A/c Dr. $205.2
To Raw material a/c $205.2
(Stock issued to production)
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