Business Administration 2257 Chapter Notes - Chapter 6: Perpetual Inventory, Financial Statement, Write-Off

• School: Western University
• Department: Business Administration
• Course: Business Administration 2257
• Professor: Amy Shuh

Document Summary

Chapter 6a inventory cost formulas in periodic systems. In the periodic inventory system, we ignore the different dates of each of the sales. We make the allocation at the end of a period and assume the entire pool of costs is available for allocation at that time. Beginning inventory + cost of goods purchased = cogafs ending. In a periodic inventory system, the cost formulas are applied to the ending inventory, which is then deducted from the cost of goods available for sale to calculate the cost of goods sold. The cost of the most recent purchases is assumed to remain in ending inventory. Once the cost of the ending inventory is determined, the cogs is calculated by subtracting the ending inventory (the cost of the units not sold) from the cost of all good available for sale (pool of costs) The cost of goods sold amounts should be separately calculated and proven in assignments.