Reference no: EM132906364
Question - In a professional report prepare the required inventory information below. On January 1, Parker Limited had a beginning inventory of 30 toilet seats which had cost the company $11 each.
During the year, the following purchase transactions took place:
March 21 Purchased 10 units for $11
August 7 Purchased 20 units for $12
November 18 Purchased 30 units for $13
December 23 Purchased 10 units for $13
The company sold 60 units over the course of the year. The two sales occurred on March31, and August 30. On March 31 the company sold 30 units. On August 30 the company sold 30 units. The price of the units was $20.
Instructions -
(a) Determine the cost of goods available for sale, assuming that the company is using a periodic inventory system.
(b) Determine (1) the cost of goods sold and (2) the cost of the ending inventory under each of the three cost flow assumptions (FIFO, weighted average, and LIFO).
Action Plan - The cost of goods available for sale is the same under all cost flow assumptions. It is calculated as beginning inventory plus net purchases (quantity X unit price). · The number of units sold is the same under all methods. To determine the Cost of Goods Sold under the FIFO (first-in, first-out) method, start counting forward from the beginning inventory (if any) until you reach the number of units sold; under the LIFO (last-in, first-out) method, start counting backwards from the last purchase date; and under the weighted average method, divide total goods available for sale in dollars by the total goods available for sale in units. · The quantity (number of units) in ending inventory is the same under all methods. To determine the total cost under the FIFO method, start from the last unit purchased; under the LIFO method, start from beginning inventory; and under the weighted average method calculate and apply the weighted average unit cost.
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