Check my work 9 Ferris Company began 2018 with 7,000 units of its principal prod
ID: 2568456 • Letter: C
Question
Check my work 9 Ferris Company began 2018 with 7,000 units of its principal product. The cost of each unit is $6. Merchandise transactions for the month of January 2018 are as follows 0.5 points Purchases Date of Purchase Jan. 1 Jan. 18 Units 6,000 7,000 13,000 Unit Cost Total Cost $42,000 56,000 98,000 Skipped Totals Includes purchase price and cost of freight. eBook Date of Sale Jan. 5 Jan. 12 Jan. 20 Units 3,000 1,000 Print Total 8,000 References 2,000 units were on hand at the end of the month. Required Calculate January's ending inventory and cost of goods sold for the month using each of the following alternatives 1. FIFO, periodic system. 2. LIFO, periodic system. 3. LIFO, perpetual system. 4. Average cost, periodic system. 5. Average cost, perpetual systemExplanation / Answer
Cost of goods available for sale:
Beginning inventory 7000 units * $6 $42000
Purchases 6000 units * $7 $42000
Purchases 7000 units * $8 $56000
20000 units $140000
Average cost per unit = $140000 / 20000 units
= $7
Periodic inventory: FIFO
Cost of goods sold:
7000 units * $6 = $42000
1000 units * $7 = $7000
$49000
Ending inventory:
5000 units * $7 = $35000
7000 units * $8 = $56000
$91000
Periodic inventory LIFO:
Cost of goods sold:
7000 units * $8 = $56000
1000 units * $7 = $7000
$63000
Ending inventory:
7000 units * $6 = $42000
5000 units * $7 = $35000
$77000
Periodic system : Average cost:
Cost of goods sold:
8000 units * $7 = $56000
Ending inventory:
12000 units * $7 = $84000
Perpetual system : Average cost method
Date Cost of goods available for sale Cost of goods sold Ending inventory Jan 1 7000 units * $6 = $42000 7000 units * $6 = $42000 5 3000 units * $6 = $18000 4000 units * $6 = $24000 10 6000 units * $7 = $42000 10000 units * $6.6 = $66000 12 1000 units * $6.6 = $6600 9000 units * $6.6 = $59400 18 7000 units * $8 = $56000 16000 units * $7.2125 = 115400 20 4000 units * $7.2125 = $28850 12000 units * $7.2125 = $86550 Cost of goods sold $53450 Ending inventory $86550.