Question

ABC Company had the following balances and transactions during 2009. Beginning inventory 10 units at $70 per unit March 6 purchased 9 units for $71 per unit March 10 sold 8 units for $100 per unit June 10 purchased 20 units for $81 per unit October 30 sold 15 units for $100 per unit Operating expenses for 2009 was $345 in total. What is total operating income for 2009 if the perpetual FIFO costing method is used?

Answer 1

Calculation of Inventory at year End:-

Particular	Purchases	Sales	Balances
Date    Activity 01/03/2009 Begning Inventory 06/03/2009 Purchase 10/03/2009 Sales 09/06/2009 Purchases 30/10/2009	Units Unit Cost Total Cost 10 $70 $700 9    $71    $639 20 $81    $1620 -	Units Unit Cost Total Cost - - 8    100    800 - 15 $100 $1500	Unit Units Cost Total Cost 10    $70 $700 10    $70 $700 9 $71 $639 2    $70 $140 9    $71 $639 2    $70 $140 9    $71    $639 20 $81 $1620 16    $81    $1296

Calculation of Operating Income for 2009:-

Closing Stock=    $1296

Sales(1500+800)=$2300

Less:-Purchases=$2259

(1620+639)

Less:-Opening Stock=$700

Less:-Operating Expenses=$345

Operating Income=$292

Note :-Take figures from Table