ACC E113 Lecture Notes - Lecture 26: Perpetual Inventory, Uptodate

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rubyporpoise450

30 Jul 2020

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Cost of sales equation: during the period. Cost of sales (cos) is directly related to sales revenue. Sales revenue = number of units sold x sales price. Cost of sales is the same number of units, multiplied by their unit costs. It includes all costs of the merchandise purchased or the finished goods sold. Cost of goods available for sale = beginning inventory + new purchases. What remains unsold at the end of the period is the ending inventory of. The portion of the cost of goods available for sale that are actually sold. The ending inventory for one accounting period then becomes the beginning. Cost of sales equation= beginning inventory (bi) + purchases (p) ending merchandise inventory which is stated on the statement of financial position becomes cost of sales on the statement of earnings inventory for the next period.

Related Questions

Oahu Kiki tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the end of each month, as if it usees a periodic inventory system. Assume Oahu Kiki's records how the following for the month of January. Sales totaled 330 units. Dates Units Unit Cost Total Cost Beginning Inventory January 1 Units 300 Unit Cost $90 Total Cost $27,000 Purchase January 15 Units 400 Unit Cost 100 Total Cost 40,000 Purchase January 24 Units 300 Unit Cost 120 Total Cost 36,000 Required: 1. Calculate the number and cost of goods available for sale Number of Goods Available for Sale Cost of Goods Available for Sale 2. Calculate the number of units in ending inventory. Ending Inventory units 3. Calculate the cost of ending inventory and cost of goods sold using the (a) FIFO, (b) LIFO, and (c)weighted average cost methods. Cost of Ending Inventory FIFO, LIFO, Weighted Average Cost Cost of Goods Sold FIFO, LIFO, Weighted Average Cost

periwinklelizard760


	Periodic Inventory Method

	Better Bottles, Inc. uses a PERIODIC inventory system and has the following information available:

	Description	# of Units	Cost per Unit	Total Cost
	Beginning inventory	20	$20.00	$400
	Jan 5 sold	15
	Jan 15 purchase	27	$22.00	594
	Jan 18 sold	21
	Jan 20 purchase	33	$30.00	990
	Total goods available for sale	80		$1,984

	Total goods sold	36


	Required:
1	Calculate both Cost of goods sold and Ending inventory using the Periodic FIFO Method.
2	Calculate both Cost of good sold and Ending Inventory using Periodic LIFO Method.
3	Use your calculations from 1-2 and complete the Income Statement.
	The company income tax rate:	0.25

1	FIFO Cost of Goods Sold - PERIODIC
	Units Sold Taken From:	# of Units	Cost per Unit	Total Cost


	Total Cost of Goods Sold FIFO


	FIFO Ending Inventory - PERIODIC
	Inventory Available	# of Units	Cost per Unit	Total Cost
	Beginning inventory
	+Purchase
	+Purchase
	(Less Cost of Goods Sold)
	Ending Inventory FIFO



2	LIFO Cost of Goods Sold - PERIODIC
	Units Sold Taken From:	# of Units	Cost per Unit	Total Cost


	Total Cost of Goods Sold LIFO


	LIFO Ending Inventory - PERIODIC
	Inventory Available	# of Units	Cost per Unit	Total Cost
	Beginning inventory
	+Purchase
	+Purchase
	(Less Cost of Goods Sold)
	Ending Inventory LIFO



3	Income Statement - Periodic Inventory Method
		FIFO	LIFO
	Sales revenue, net	25,000	25,000
	Cost of goods sold
	Gross profit
	Operating expenses	8,000	8,000
	Operating income before tax
	Income tax expense
	Net income

plumporpoise441

10.

Ferris Company began 2016 with 6,000 units of its principalproduct. The cost of each unit is $6. Merchandise transactions forthe month of January 2016 are as follows:

Purchases

Date ofPurchase	Units		Unit Cost*		Total Cost
Jan. 10		5,000	$	7	$	35,000
Jan. 18		6,000		8		48,000

Totals		11,000			$	83,000

*Includes purchase price andcost of freight.

Sales

Date of Sale	Units
Jan. 5		3,000
Jan. 12		2,000
Jan. 20		4,000

Total		9,000

8,000 units were on hand at theend of the month.

Required:

Calculate January's ending inventory and cost of goods sold forthe month using each of the following alternatives:

FIFO	Cost of Goods Available for Sale			Cost of Goods Sold - Periodic FIFO			Ending Inventory - Periodic FIFO
FIFO	# of units	Cost per unit	Cost of Goods Available for Sale	# of units sold	Cost perunit	Cost of Goods Sold	# of units in ending inventory	Cost per unit	Ending Inventory
BeginningInventory	6,000	$6.00	$36,000	6,000	$6.00	$36,000		$6.00	$0
Purchases:
January 10	5,000	$7.00	35,000		$7.00	0		$7.00	0
January 18	6,000	$8.00	48,000		$8.00	0		$8.00	0
Total	17,000		$119,000	6,000		$36,000			$0

LIFO	Cost of Goods Available for Sale			Cost of Goods Sold - Periodic LIFO			Ending Inventory - Periodic LIFO
LIFO	# ofunits	Cost perunit	Cost ofGoods Available for Sale	# of unitssold	Cost perunit	Cost ofGoods Sold	# of unitsin ending inventory	Cost perunit	EndingInventory
Beginning Inventory
Purchases:
January 10
January 18
Total

AverageCost	Cost ofGoods Available for Sale			Cost ofGoods Sold - Average Cost			EndingInventory - Average Cost
AverageCost	# of units	Average Cost per unit	Cost of Goods Available for Sale	# of units sold	Average Cost per Unit	Cost of Goods Sold	# of units in ending inventory	Average Cost per unit	Ending Inventory
Beginning Inventory	6,000		$36,000
Purchases:
January 10	5,000		35,000
January 18	6,000		48,000
Total	17,000		$119,000

PerpetualLIFO:

Cost of Goods Available for Sale

Cost of Goods Sold - January 5

Cost of Goods Sold - January 12

Cost ofGoods Sold - January 20

Inventory Balance

# of units

Cost per unit

Cost of Goods Available for Sale

# of units in ending inventory

Perpetual Average	Inventory on hand			Cost of Goods Sold
Perpetual Average	# of units	Cost per unit	Inventory Value	# of units sold	Avg.Cost per unit	Cost of Goods Sold
Beginning Inventory
Sale - January5
Subtotal Average Cost
Purchase - January 10
Subtotal Average Cost
Sale - January12
Subtotal Average Cost
Purchase - January18
SubtotalAverage Cost
Sale - January 20
Total

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ACC E113 Lecture Notes - Lecture 26: Perpetual Inventory, Uptodate

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