Question

ABC applies a periodic inventory system. The following information related to its merchandise inventory during the month of October 2019 is available:

Oct. 1	Inventory on hand	3,000 units; cost €6,10 each
9	Purchase	10,000 units; cost €5,5 each
15	Sale	9,000 units; for €13,0 each
17	Purchase	7,000 units; cost €5,0 each
23	Sale	8,000 units; for €11,0 each
31	Inventory on hand	3,000 units

The cost of goods sold reported in ABC’s October 2019 income statement under the First-in, First-out (FIFO) cost flow method, is:

Select one:

a. 62,500

b. 93,300

c. 162,500

d. 108,300

e. 37,500

Question 6

The inventory balance reported in ABC’s October 2019 statement of financial position under the Weighted-average cost flow method, is:

Select one:

a. 16,245

b. 10,500

c. 17,500

d. 18,300

e. 12,500

Answer 1

5
Total sales units	17000	=9000+8000
Cost of goods sold:
From Inventory on hand	18300	=3000*6.1
From Oct. 9 Purchase	55000	=10000*5.5
From Oct. 17 Purchase	20000	=(17000-3000-10000)*5
Cost of goods sold	93300
Option B 93,300 is correct
6
	Units	Unit cost	Total cost
Inventory on hand	3000	6.1	18300
Oct. 9 Purchase	10000	5.5	55000
Oct. 17 Purchase	7000	5	35000
Total	20000		108300
Average cost per unit	5.415	=108300/20000
Inventory balance	16245	=3000*5.415
Option a 16,245 is correct