Question

5.

Shown below is activity for one of the products of Denver Office Equipment: January 1 balance, 500 units @ $55  $27,500 Purchases:     January 10: 500 units @ $60     January 20: 1,000 units @ $63 Sales:      January 12: 800 units      January 28: 750 units Required:Compute the January 31 ending inventory and cost of goods sold for January, assuming Denver uses average cost and a perpetual inventory system (fill in the blanks on the next page).

January 12 COGS:                        ______________

January 28 COGS:                        ______________

January 31^stending inventory:     ______________

Circle the right answer below:

If Denver Office used a FIFO perpetual system instead of average cost, their ending inventory will be:

            

HIGHER                                                /                                   LOWER

than the one reported above.

Answer 1

Required:Compute the January 31 ending inventory and cost of goods sold for January, assuming Denver uses average cost and a perpetual inventory system (fill in the blanks on the next page).

Date	Unit purchase	Unit Cost	Purchase Cost	Unit sold	Unit cost	Cost of goods sold	Ending inventory Units	Unit Cost	Ending inventory
Jan 1							500	55	27500
Jan 10	500	60	30000				1000	57.50	57500
Jan 12				800	57.50	46000	200	57.50	11500
Jan 20	1000	63	63000				1200	62.083	74500
Jan 28				750	62.083	46562.50	450	62.083	27937.50

January 12 COGS: $46000

January 28 COGS: $46562.50

January 31st ending inventory: $27937.50

Ending inventory would be higher under FIFO perpetual method (450*63) = $28350