Calculate the Cost of Goods Sold and Ending Inventory

Assignment Help Accounting Basics

Reference no: EM132462953

Problem -

Part I - Jason Company uses a perpetual inventory system and reported the following transactions involving inventory during the month of December 2018:

December 1	Beginning inventory	100 units	@ $8.00
December 4	Purchases	200 units	@ $8.25
December 13	Sales	150 units	@ $11.20
December 21	Purchases	300 units	@ $8.50
December 26	Sales	375 units	@ $11.20
December 30	Purchases	400 units	@ $8.75

Required - Show all workings and rounded amounts to one decimal place of a dollar.

a. Calculate the Cost of Goods Sold and Ending Inventory as of December 31, 2018 using First-In-First-Out (FIFO) method.

b. Calculate the Cost of Goods Sold and Ending Inventory as of December 31, 2018 using Weighted Average Cost method.

Part II - Financial analysts and investors are very interested in how quickly a company is turning over its inventory as quick turnover yields higher profits. There are events that may have an effect on the inventory turnover ratio.

Required - For each of the following two events, indicate and explain whether inventory turnover would increase, decrease or not be affected.

a. Change from Weighted Average Cost method to First-In, First-Out method during an inflationary environment.

b. Cut sales prices in order to increase sale.

Reference no: EM132462953

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