ACCTG 101 Lecture Notes - Lecture 17: Perpetual Inventory, Weighted Arithmetic Mean, Moving Average

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harlequinmink794

18 Dec 2020

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Weighted average is for periodic inventory systems. This calculates the weighted average at the end of the reporting period to figure out the value of cogs and inventory. Moving average is for perpetual inventory systems. A new average unit cost is calculated each time a purchase is made because. Cogs is recognized as the time of the next sale and it must be using the updated average cost. Weighted average calculates the average of the cost of goods sold and ending inventory cost through dividing the total cost by the number of units in beginning inventory and purchased. Moving average calculates a new average every time a purchase is made. Because cogs at the updated cost has to be recognized at the time of the next sale. This is a reasonable cost to inventory based on an average cost. Costs assigned closely follows the actual physical flow. Simple to apply, objective, less subject to income manipulation.

Related Questions

WoodwardIndustries is a retailer. Assume that there are no credittransactions; all amounts are settled in cash. The followinginformation for the month of January 2017.
					Unit Cost or
	Date	Description		Quantity	Selling Price
	Dec. 31	Ending inventory		172	$22
	Jan. 2	Purchase		103	24
	Jan. 6	Sale		179	41
	Jan. 9	Purchase		68	26
	Jan. 10	Sale		48	46
	Jan. 23	Purchase		110	27
	Jan. 30	Sale		132	49

a)	Please calculate (fill in the blanks) GOCS andEnding Inventory using various inventory methods, under theperpetual costing system:
	Please put your final answers in the designatedcells below. You can you the next tab (worksheet) for calculationpurposes.

				COGS		Ending Inventory	Gross Profit
	Perpetual		FIFO
			LIFO
			Weighted Average
							Note: Gross Profit = Revenue - COGS

amethystbear981

Use the following information for the Exercisesbelow.

[The following information applies to the questionsdisplayed below.]

Laker Company reported the following January purchases and salesdata for its only product.

Date		Activities	Units Acquired at Cost								Units sold at Retail
Jan.	1	Beginning inventory	140	units	@	$	6.00	=	$	840
Jan.	10	Sales										100	units	@	$	15
Jan.	20	Purchase	60	units	@	$	5.00	=		300
Jan.	25	Sales										80	units	@	$	15
Jan.	30	Purchase	180	units	@	$	4.50	=		810
		Totals	380	units					$	1,950		180	units

The Company uses a perpetual inventory system. For specificidentification, ending inventory consists of 200 units, where 180are from the January 30 purchase, 5 are from the January 20purchase, and 15 are from beginning inventory.

Exercise 6-3 Perpetual: Inventory costing methods LO P1

Required:
1. Complete the table to determine the costassigned to ending inventory and cost of goods sold using specificidentification.
2. Determine the cost assigned to ending inventoryand to cost of goods sold using weighted average.
3. Determine the cost assigned to ending inventoryand to cost of goods sold using FIFO.
4. Determine the cost assigned to ending inventoryand to cost of goods sold using LIFO.

Required 3

Required 4

Complete the table to determine the cost assigned to endinginventory and cost of goods sold using specific identification.

Specific Identification
	Available for Sale			Cost of Goods Sold			Ending Inventory
Purchase Date	Activity	Units	Unit Cost	Units Sold	Unit Cost	COGS	Ending Inventory- Units	Cost Per Unit	Ending Inventory- Cost
Jan. 1	Beginning inventory	140
Jan. 20	Purchase	60
Jan. 30	Purchase	180
		380		0		$0	0		$0

Determine the cost assigned to ending inventory and to cost ofgoods sold using weighted average. (Round cost per unit to 2decimal places.)

Weighted Average - Perpetual:

Goods Purchased

Cost of Goods Sold

Inventory Balance

Date

# of units

Cost per unit

# of units sold

Cost per unit

Cost of Goods Sold

# of units

Cost per unit

Inventory Balance

January 1

140

$6.00

$840.00

January 10

January 20

Average cost

January 25

January 30

Totals

Determine the cost assigned to ending inventory and to cost ofgoods sold using FIFO.

Perpetual FIFO:

Goods Purchased

Cost of Goods Sold

Inventory Balance

Date

# of units

Cost per unit

# of units sold

Cost per unit

Cost of Goods Sold

# of units

Cost per unit

Inventory Balance

January 1

140

$6.00

$840.00

January 10

January 20

January 25

January 30

Totals

Determine the cost assigned to ending inventory and to cost ofgoods sold using LIFO.

Perpetual LIFO:

Goods Purchased

Cost of Goods Sold

Inventory Balance

Date

# of units

Cost per unit

# of units sold

Cost per unit

Cost of Goods Sold

# of units

Cost per unit

Inventory Balance

January 1

140

$6.00

$840.00

January 10

January 20

January 25

January 30

Totals

plumkoala693

Anthony Company uses a perpetual inventory system. It enteredinto the following purchases and sales transactions forMarch.

Date Activities Units Acquired at Cost Units Sold at Retail
Mar. 1 Beginning inventory 50 units @ $50/unit
Mar. 5 Purchase 200 units @ $55/unit
Mar. 9 Sales 210 units @ $85/unit
Mar. 18 Purchase 60 units @ $60/unit
Mar. 25 Purchase 100 units @ $62/unit
Mar. 29 Sales 80 units @ $95/unit
Totals 410 units 290 units
Information given:

Compute the cost of goods available for sale and the number ofunites available for sale.

Compute the cost assigned to ending inventory using (a) FIFO,(b) LIFO, (c) weighted average, and (d) specific identification.For specific identification, the March 9 sale consisted of 40 unitsfrom beginning inventory and 170 units from the March 5 purchase;the March 29 sale consisted of 20 units from the March 18 purchaseand 60 units from the March 25 purchase. (Due to rounding, the sumof Cost of Goods Sold and Ending inventory may not equal the Costof Good available for sales. Round your per unit costs to 3 decimalplaces and inventory balances to the nearest dollar amount. Omitthe "$" sign in your response.)

Ending
Inventory
(a) FIFO $ 7400
(b) LIFO $ 6840
(c) Weighted average $ 7176
(d) Specific identification $ 7030

Now I need to compute gross profit earned by the company for eachof the four costing methods.

LIFO is 8990
I can't figure out the FIFO, Weighted Average, and SpecificIdentification.
I really appreciate any help. Thanks.

purplemammoth37

ACCTG 101 Lecture Notes - Lecture 17: Perpetual Inventory, Weighted Arithmetic Mean, Moving Average

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