Question

Samuelson and Messenger (S&M) began 2018 with 210 units of its one product. These units were purchased near the end of 2017 for $20 each. During the month of January, 105 units were purchased on January 8 for $23 each and another 210 units were purchased on January 19 for $25 each. Sales of 140 units and 110 units were made on January 10 and January 25, respectively. There were 275 units on hand at the end of the month. S&M uses a periodic inventory system. Required: 1. Calculate ending inventory and cost of goods sold for January using FIFO. 2. Calculate ending inventory and cost of goods sold for January using average cost.

Answer 1

1)

FIFO
Date	Particulars	Units	Cost per Unit	Total Cost
01/01	Beginning Inventory	210	20.0	4,200
01/08	Purchase	105	23	2,415
01/19	Purchase	210	25.00	5,250
	Cost of Goods Available for Sale	525		11,865
	Less: Ending Inventory (210*25+65*23)	275		6,745
	Cost of Goods Sold	250		5,120

2)

Average Cost method
Date	Particulars	Units	Cost per Unit	Total Cost
01/01	Beginning Inventory	210	20.0	4,200
01/08	Purchase	105	23	2,415
01/19	Purchase	210	25.00	5,250
	Cost of Goods Available for Sale	525		11,865
	Less: Ending Inventory	275	22.6	6,215
	Cost of Goods Sold	250		5,650